Despite the devastation in the wake of the global financial crisis, there are certain areas of the securitization market that present opportunities for investors.

The lower valuations on commercial real estate, for instance, present ideal pockets of investment - trophy properties are being sold at a discount. In her cover story, Nora Colomer explains how with the disappearance of traditional investors in subordinate tranches, new buyers can snatch up discounted CMBS positions and make a profit.

The good deals do not end in the commercial mortgage-backed arena, however. Nora argues that another good place to look for great buys might be in esoteric deals that don't have a monoline wrap. Experts say that without the wrap that typically came with these types of transactions, investors can earn an additional 100 to 150 basis points more, on average, than they would buying plain-vanilla ABS.

Finding the right investment choices might mean exploring two altogether different markets.

My story explores the differences between covered bonds and ABS. Market experts say that both markets could definitely coexist, as these products have very different sets of buyers. They also represent varying liquidity and structural advantages and constraints, so it's up to issuers to choose which market would provide them with the best execution.

Speaking of taking advantage of the situation, the rating agencies are currently leveraging their research capabilities as a way to smooth over their tarnished reputations. John Hintze notes in his story that after being a target of criticism for their wholesale downgrades, the top three rating agencies are making amends by tailoring their research efforts to meet the needs of investors. These efforts include structured finance and ABS research.

It seems that the government should follow the rating agencies' example by coming up with an effective game plan - to combat the housing crisis. Bill Berliner in this month's column laments the focus of recent housing initiatives that has almost exclusively been on short-term remedies such as foreclosure prevention and tax credits. He adds that financial reform efforts have also ignored the impact of the proposed legislation on housing. Instead, he says that the administration and Congress need to address the long-term future of housing and focus on restoring the housing market to its normal functioning.

While the U.S. has been missing the mark in terms of the housing crisis, innovative Latin American deals are being prepped.

Felipe Ossa reports that there is an El Salvadoran diversified payment rights deal that is brightening the sector after its poor showing this year. Although small in size and funded by the International Finance Corp. and not the market, Felipe says the deal from issuer Fedecredito is a landmark for the evolution of this asset class on more than one front. Meanwhile, in Argentina, the province of Chubut as of press time was about ready to issue a $150 million deal backed by oil and gas royalties. Chubut's deal, according to Felipe, should include both cross-border and local investors.


- Karen Sibayan, Editor

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