Generally considered a setting to indulge brazen debauchery, Las Vegas last week was the scene for an industry conference that, instead, set down to work.
"This is where business is getting done," Micah Green, Co-CEO of the Securities Industry and Financial Markets Association told delegates during opening remarks for the ASF 2007. Indeed, ABS professionals stormed The Venetian and the city with one-on-one meetings between issuers, arrangers and investors. The most popular general and breakout sessions showcased hedge funds, CDOs and SIVs. Instead of blending into the background, these market players are bringing refinements and sophistication to the market. While the conference clearly demonstrated that those segments of the ABS market are developing faster than they are aging, it would be a mistake to take one's eye off of developments in established ABS sectors. Selections from this year's ASF 2007 conference notebook include:
*Investment banking firm The Riderwood Group is marketing its first life settlement ABS deal. The $140 million transaction grew out of the firm's initial life insurance policy trading platform. While running that business, the Towson, Md.-based company noticed that a lot of investors that had not previously invested in life settlement deals were intrigued by the product, and yearned for exposure to the asset class. The caveat was that they could not own the policies, so Riderwood created the SPV that allows investors to participate in the asset class. The deal is expected to close in March.
*ABN Amro, one of the most active sponsors of international ABCP programs, is sending its vehicles abroad again. After reconfiguring its Asia-based $1.5 billion Orchid Funding Corp. to invest in emerging markets assets and buying a portion of a Turkish diversified payment rights deal recently, the bank is tweaking its Abel Funding and Tasman Funding programs to issue ABCP in Europe. Launched in 1997, the twin programs are multiseller vehicles that share a strong focus on warehousing Australian mortgages, although the source of their assets is almost evenly split between U.S. and Australia, Luis Carvalho, executive director and head of ABN Amro's conduit securitization group in Europe said. The bank intends to begin trading in European ABCP by mid-February.
*Market participants are also beginning to discuss the possibility of bringing the ABCP business to Mexico, Everett Rutan, a senior vice president at Moody's Investors Service who oversees its ABCP group, said during a panel session. Those discussions will, no doubt, involve how to obtain adequate liquidity for the vehicles, said one market player.
*For years, multiseller ABCP vehicles have financed so-called capital call agreements. Also known as subscription agreements, they represent capital commitments that high net worth individuals and families, insurance companies or institutional investors pledge to investment funds. Talk now turns to creating standalone ABCP vehicles that could finance the commitments exclusively.
No, this is not your farming report. Wheat from the Chaff' is a new weekly column that will zero in on the ABS market's most germane events and deals and explain how they shape issuance and trading. Just be grateful we didn't call it The Threshing Floor'.
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