The increase in appetite for esoteric ABS hasn't been solely for on-the-run assets, the market is increasingly looking at off-the-run assets that often require more work to get done.
On-the-run esoteric assets have gained a good deal of credibility as investors in search of yield and who have more time on their hands are more willing to do the work to get these deals done.
However, market players said that a lack of competing paper from the more traditional ABS asset classes has left more buyers open to more unusual asset classes.
One sector that is seeing a huge bid are structured settlements. Peachtree Settlement Funding at the end of last year closed a $106 million placement of bonds backed by structured settlements.
The placement was substantially over-subscribed, thus resulting in very attractive pricing for the organization.
One market player said that demand for even such off-the-run asset classes highlights that liquidity has returned to the esoteric ABS sector.