Either as a spur or a hindrance to structured finance, regulations remain the dominant theme of our industry (and, by extension this magazine) in 2014.
For our cover story on the securitization of trade finance — an asset class quite literally the size of the globe — Felipe Ossa examines how regulations, notably Basel III, are leading banks to consider issuing deals backed by these assets on either a funded or synthetic basis. The deals Lighthouse and Trade MAPS last year brought more attention to trade finance than it’s gotten in a while. There’s more to come.
CLOs are also facing regulations, which many players criticize as too punitive.
Reporting from IMN’s 3rd Annual Conference on CLOs and Leveraged Loans in New York, Glen Festa explores the ongoing battle over the Volcker Rule and when it takes effect for CLO holdings. In addition, in an Observation, NCI Building Systems CEO Norm Chambers argues that suffocating CLOs with rules will only end up squeezing funding for the corporate sector, particularly small and medium-sized companies. All the same, Festa found at the conference that demand for CLO’s at least for now remains robust.
Also on the regulatory front, John Hintze writes about the uncertain effects that new rules based on borrowers’ ability to pay will have on mortgage securitization.
Regulations are also being reconsidered, at least in Europe, where there appears to be growing acceptance among banking authorities that securitization is vital to restarting the economy there by making it cheaper for small and medium companies to borrow.
But not everything’s about regulation.
REO-to-Rental is making noise with the second deal in the sector coming out last month. Nora Colomer examines why it priced wider than the debut deal, while Felipe looks into one of the claims made by the sector’s critics: that it could destabilize home prices in the future.
Felipe also writes about the most voluminous asset class from Turkey, diversified payment rights, and finds that in the post-crisis era not only is this sector doing well, originators are getting deals with less help than ever from foreign participants, be they insurers or arrangers.