NEW YORK - Although Basel II and U.S. regulatory changes continue to have an impact on the conduit market, growth in asset-backed commercial paper issuance is expected to continue, said Deborah Seife, managing director at Fitch Ratings at a briefing the ratings agency hosted here last week.
New risk-based liquidity rules may weaken bank-provided liquidity support and limit the ability of liquidity sources to fund certain lower rated assets, according to a Fitch research report.
As a result of this liquidity event, there may be a need for increased credit enhancement or structural remedies as the industry looks for more efficient structures, added Seife.
"I think we're going to see more structural innovation as a result of many of these regulatory changes that are being imposed on the players," she said.
"These companies don't need additional cash," said Siefe, referring to the multi-seller conduits. "As the economy has been a bit slower over the past few years, a lot of companies are flush with cash and their growth plans might not be as aggressive as they had been during stronger economic times."
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