In the past three years, the proportion of new-issue non-mortgage ABS deals placed in the private/144A market has risen considerably, according to a recent Barclays Capital report.
The increase was to roughly a 47% average in 2009-2011 from a just-less-than 15% average in 2000-2008. In fact, in 2010, private/144A non-mortgage securitization outpaced public volume for the first time, analysts stated.
Analysts found that, in terms of issuance across non-mortgage ABS, a slow down in public issuance is the main cause of the higher private/144A market share.
Barclays analysts said that the financial crisis, the resulting recession and regulations under the Dodd-Frank Act have shared some of the blame for the shift. Many issuing firms, they noted, are choosing the private/144A route to speed up the execution of their transactions and to lessen the administrative burdens related to a Securities and Exchange Commission registered offering.
But, analysts said that a closer look at the issue would show that overall securtization volumes are well below levels from the 2000s. And even though private/144A volume is more than its historical averages, it is generally the public issuance component that has gone away. Analysts said that this is the reason for the increasing share of private/144A non-mortgage ABS issuance.
Analysts said that the auto-related, credit card and student loan asset classes make up most of the shift.
Public issuance of credit card and student loan deals has gone down considerably. But, private/144A volumes have been similar to peak pre-crisis levels.
For instance, they said that total credit card ABS volume dropped to $16.3 billion in 2011, merely 17% of the peak in 2007, roughly 40% of this was issued in the private/144A market. But, on a dollar basis, 2011 private/144A credit card ABS issuance is roughly the same as it was in 2007.
The trend is almost the same in student loan ABS. Total volume is considerably down from the 2005 and 2006 peak years, analysts said. They said that even though new-issue deals were skewed toward the private/144A side from 2009-2011, the dollar volume of such ABS were basically in line with, to slightly more than, 2007.
In terms of auto-related offerings, total issuance volumes have rebounded, analysts stated. However, the extent of the comeback hasn't been to pre-recession levels.
Nonethelesss, analysts said that the dollar volume and share of publicly offered auto-related securitzations has been rising in the past three years, although the dollar volume of private/144A auto transactions has held comparatively steady, which has resulted in a decreased issuance share, Barclays analysts said.