ECB Considers Accepting Mezzanine Securitizations

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The European Central Bank said at a press conference on Wednesday that it was considering accepting mezzanine securitization tranches as eligible repo collateral.

Deutsche Bank analysts said in a report today that it was their opinion, that the mezzanine collateral the ECB will accept “pertains exclusively to mezzanine ABS issued under the asset-backed securities program (ABSP) rather than any wholesale change in ECB collateral policy.”

ABSP refers to the European Investment Bank and the European Commission initiative on using securitization to facilitate up to €100 billion of SME lending between 2014 and 2020. Mezzanine ABS issued from the program is likely to come with an EIB wrap, said Deutsche Bank.

In July the Bank lowered the rating requirements for senior securitization tranches used senior securitization tranches used as collateral to 'A' from 'AAA'.

“Better regulatory treatment of securitizations could be positive for European issuance over the long term, in our view,” said analysts at Standard & Poor’s.


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