For a new kid on the ABS conference block, the American Securitization Forum (ASF) did well for itself as a solid showing flocked to attend ASF 2004 held at the Fairmont Scottsdale Princess in Scottsdale, Arizona. Unofficial estimates pegged the attendance at over a thousand, a number that ASF Chairman Vernon Wright aspires to double for next year's event. In fact, organizers have tentatively set a Jan. 23-26, 2005 date for next year's gathering.
In his welcome remarks, Wright said that the ASF will continue playing a proactive part in shaping the future by educating and informing regulators about "our collective industry." Aside from this, he said that one of the main goals of the ASF remains boosting membership, particularly among investors. He added that the organization will not rest on its laurels. "Are we satisfied? Absolutely not!" he stated, proclaiming that throughout 2004, ASF will focus on the investor.
The investor focus was quite apparent in the conference agenda, with many sessions devoted to the blow-ups both directly and indirectly related to ABS, and discussion focusing on the telltale signs of when a company might take the wrong turn and how investors should protect themselves. The panel on Investor and Market Issues featured participants talking about now infamous names like LTV Steel, DVI Inc., etc, etc. With discussions focusing on the whole gamut of what could go wrong: servicing issues, fraud, portfolio deterioration.
Panelists asked the question, "Are the bonds paying up?"
Of course, Enron was on everyone's minds, with discussions centering on how it is not true securitization but on how investors could learn from the experience.
Aside from discussions on ABS horror stories, there is a focus on the structure --- as many panels revisited the meaning of bankruptcy remoteness as well as historical discussions on the evolution of the industry. Many panelists said that despite the recent setbacks, the industry remains viable and provides a good funding alternative. Speaking on the State of the Industry panel, Lehman Brothers research head David Heike said that ABS still has very strong credit fundamentals though offset by rising rates. He said that while the industry did not pass with flying colors, it still has performed well.
In her presentation Diane Citron, a partner at Mayer Brown, Rowe & Maw showed encouraging statistics as to how important the industry is to the fixed-income world. In the past ten years, the RMBS, ABS and CMBS securitization has grown to $8.5 trillion. She said that 70% of all mortgages, 75% of all auto loans and 85% of all credit card accounts have now been securitized. This is equivalent to 33% of the debt market.
The investor focus was also apparent in the selection of topics at the conference as there were many issuer presentations from all the various sectors. There were also updates on the different sectors such as student loans, CDOs (three panels devoted to this topic), and the auto sector.