The American Securitization Forum (ASF) held its Sunset Seminar last week reporting on the progress of the Term Asset-Backed Loan Facility (TALF) program just as the Federal Reserve announced it would incorporate legacy CMBS assets as part of the CMBS leg of the program.
The May TALF subscription round supported more consumer ABS deals than the previous two subscriptions combined, with $13.6 billion. More than 70 percent was financed through TALF, reported the ASF. TALF supported the issuance of new credit card, auto, student loan, and equipment ABS.
"The ASF seminar [included] some good data points about the value of TALF," a market source said. "The presentation showed the increase in overall ABS issuance as well as more interesting data showing that spreads in the secondary market for ABS have also dropped significantly."
Even on the CMBS side where business is only just getting underway, the ASF said that spreads dropped after TALF was announced and then CMBS was added.
The market source said that ASF data indicated that the New York Federal Reserve's "stress index" of insurers dropped dramatically once CMBS were included under the program. "The pricing for the legacy CMBS seems to be fair and well thought-out; there were no indications about how active the program would be," the source said.