With the ever-expanding ABS market, the growth of new ABS products and asset classes will always be an important topic. At the American Securitization Forum annual meeting to be held next week, there would be a session devoted entirely to emerging markets and products. Paul Burke, a managing director at Ambac Assurance Corp., will be moderating the discussion that would focus on such emerging assets as life insurance or triple-X transactions as well as the growth of securitization in Latin America, Asia and Eastern Europe.
"We are going to spend time talking about new products and markets that are opening up to securitization," said Burke. For instance, China is a country where potential ABS deals could emerge, especially with the two future flow government pilot programs that were completed in the past year. "The question is: Are we that much closer to a true Chinese securitization market?" Burke said.
Emerging market mortgage securitizations are also an avenue for growth. In Mexico, for instance, there have been securitizations by non-bank finance companies known as the Sofoles, which originate mortgages and bridge loans for construction.
Emerging asset classes would also be a focus of the upcoming panel. Triple-X or life insurance deals, for instance, are becoming increasingly active. A question for the panelists would be whether this type of securitization would become flow business in the future, Burke said.
Another interesting development is the emergence of whole business securitizations in the U.S. This asset class is closely identified to the U.K, where the existing insolvency law was fundamental to the development of this type of securitization. Deals of this type have also come out of Malaysia, which has a similar legal construct to the U.K.
"Whole business securitizations are, in a sense, a hybrid of a corporate deal and a securitization - while you are looking at the assets of the company, there is also a much stronger emphasis on the corporate credit," Burke said. One of the hurdles to whole business securitizations is that it is very difficult to arrange for important securitization features such as a substitute servicer, which is in direct contrast to U.S. RMBS transactions.
Participants in the panel include Winston Chang, a director at Standard & Poor's, Brigette Posch, head of Latin American securitization at Deutsche Bank Securities, Steve Rooney, a partner at LeBoeuf, Lamb, Greene & MacRae LLP and William Magid, managing director, JPMorgan Securities.
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