The mood at Information Management Network 's (IMN) and European Securitization Forum's (ESF) Global ABS has been surprisingly optimistic despite the fact that primary issuance so far this year has been off by roughly 50%. The gathering is being held in Cannes this week.
Instead of focusing on what has happened, industry players are beginning to realistically approach how to get the market back on its feet.
"There are no guarantees about when market will come back but it will," said Rick Watson, managing director of the ESF while delivering his welcome note yesterday morning. "The market made sense before the turmoil and it will make sense after. We as an industry need to listen, lead and communicate."
Kevin Ingram, a partner at Clifford Chance and a twenty-year veteran of the securitization market who led Monday's opening panel, said he believes the market has seen its cruelest month and it's likely that things will continue to improve.
"What we have to understand is that what's happened is a total repricing of a 10-year cycle and it hasn't been just personal to the securitization market," said David Basra, head of securitized and real estate markets at Citigroup who was also a panelist. "But people need capital and this market is about providing capital."
Over coming months, panelists at the opening day panel said they expected to see the emergence of a more normal market and, over the medium to long term, securitizations will prove resilient. "But it's unlikely that we will ever see the volumes of 2006 and 2007," said Lee Rochford managing director, head of financial institutions at Royal Bank of Scotland.
Ganesh Rajendra, managing director and head of securitization research at Deutsche Bank, said that when compared to how other segments of the financial markets have weathered the dismal price performance of recent times, pricing within the securitization market has proved resilient.
But as the market gears for a return to more normal conditions, it is clear that participants still face the issue of mark-to-market accounting. Basra said that the accounting issues for this product won't really make sense in the future. "The mark-to-market value concept is not flawed (but) there is just more work that needs to be done, especially when it comes to valuing performance in an illiquid market," he said.