Analysts with Fitch Ratings took a broad look at the regulatory and legislative environment surrounding the ABS market and deemed it generally non threatening for the time being. On a conference call held last week, the analysts opined on Securities & Exchange Commission's Regulation AB, the newly enacted bankruptcy reform and the reauthorization of the Higher Education Act. Though each will impact deal performance in their own ways and to varying degrees, the analysts did not give any indication that any of the issues would cause immediate changes to their ratings assessments.
Rui Pereira, managing director in the ABS group, said that while Reg AB is an overall boon to disclosure and transparency in the market, some issuers are likely to experience setbacks as they try to get their arms around the rule. Pereira said timing delays of new issuance and non-compliant servicer reports could be potential speed bumps for some issuers in the road to full Reg AB compliance. "That may spook investors and affect issuers from a pricing perspective," Pereira said. Pereira warned that price tiering could develop between compliant and non-compliant issuers, with compliant issuers able to get tighter spreads on new issues.