As an increased number of investors seek to have an in-depth knowledge of the fixed-income products they are buying, more and more companies are looking to the Internet as an efficient and effective means to disseminate timely and relevant market information.
Among these companies are trustees Bank One Global Corporate Trust Services and Chase Capital Markets Fiduciary Services.
Bank One Global Corporate Trust, along with ABSnet's developer Lewtan Technologies, recently launched a Web site that would not only provide information on mortgage-backed deals but on other asset types as well, said Walter Miller, managing director of the investor management group at the company.
"I think that's one of the really key features of our site versus some of the really large trustees," he noted.
Chase Capital Markets Fiduciary Services, which in November released the current version of its Web site, has raised the number of deals that it posts by 25%. Aside from residential mortgage-backed and commercial mortgage-backed transactions, the company also provides a lot of online information on home-equity and auto loans.
"In terms of the information that gets posted on Capital Markets Fiduciary Services' Web site, we have gone beyond what many trustees typically provide," said Tyrone Po, managing director at the firm. "In addition to traditional factor-table information, we also provide loan-level data certificate holder statements, surveillance reports, and other transaction-related details."
Investors are responding positively. "A user of the data told us that the Internet was their preferred method of obtaining information on securitizations," said Po. "This particular user was interested in certificate holder statements and other information updates that would help them in their surveillance activities."
Miller predicts that the interest in Bank One Global Trust's Web site can be as extensive as the level of interest in asset-backed securities, "though it's really difficult for me to say what the hit-ratio will be until we actually get some statistics."
Streamlining Operations
The Internet is a more efficient way for companies to give a comprehensive presentation of data.
Capital Management Sciences (CMS), a provider of fixed-income analytical software, recently added an online resource for mortgage-backed securities which contains a detailed breakdown of more than a million individual mortgage pools and collateralized mortgage obligation tranches. The asset-backed component will be added soon.
"It's something that our clients have a need for in doing their relative-value analysis in terms of whether they want to purchase one security versus another," said Teri Geske, vice president of product development at CMS.
"It's a huge volume of information to download on someone's PC," she added. "Delivering it via the Internet on a browser is a much more intelligent technology to use to make this huge data set available and to present it in an attractive way," she added.
Chase's Po believes the Web becomes crucial as investors seek to know more about specific pool characteristics. "To the extent that investors have become more interested in the specifics of the collateral supporting the securities, it's important for them to be able to go to the Web and gain easy access to the information."
The Web is also a means to streamline company operations. Bank One's Miller expects the Internet to eventually "be the accepted means of communicating information."
Historically, the company has provided data through a paper-intensive process, by mailing and faxing the information. Through its recently launched Web site, the company aims not only to eliminate the paper-intensive process, but to also make timely deal information available to investors around the clock.
"We are committed to have the most current payment data on the Net 24 hours after it becomes available," he added.
CMBS Deals Get More Hits
Though more and more companies have utilized the Net to provide detailed information on asset-backed securities, there is a relatively larger demand from investors for in-depth CMBS data.
"Typically, in ABS, investors have not been as sensitive to particular characteristics of the underlying asset pools as CMBS investors have," said Steven Macy, vice president and senior credit officer at Moody's Investors Service.
He said that CMBS deals tend to be "lumpy," meaning there are relatively fewer assets involved. So if an asset performs poorly, a deal may be adversely affected.
In contrast, since ABS pools contain a lot more assets, these portfolios are not as sensitive to individual loans that perform poorly.
"This is why ABS investors have not really pushed for immediate access to pool information," Macy noted. On the other hand, beginning as early as 1995 or 1996, prospectuses for CMBS deals have listed Web sites where investors can download monthly deal information.
Though the role of the Internet is not as significant in ABS transactions, it has certain advantages. Macy said that distributing ABS deal data through the Web, aside from being "another step in trying to make these deals more transparent," is also "an effective way of dealing with the fact that securities are now held in book-entry form."
Before the book-entry form was used, investors used to get what's called a monthly certificate holder's statement, which is an overview of what's going on in the underlying pool and what's paying out in terms of interest.
With the book-entry form now being standard, trustees generally don't know who the underlying securities holders are, thus it is harder to get this kind of pool information out to them. Through the Internet, interested investors can conveniently access such data.
The ABCP Factor
The use of the Internet on the ABCP side has privacy restrictions, in contrast to the term market, where information is made available to the general public.
"On the ABCP side, it has taken a slower process to develop information on the Internet because of private placement/security issues and access issues due to the program's structures," said Natalie Metz, assistant vice president and senior investment analyst at Federated Investors, "Sponsors of conduits are overcoming these obstacles by providing log-ins and passwords to qualified investors."
Four-two paper, which is issued through the ABCP conduits, has a specific investor base, so sponsors have to be careful as to who is accessing the online information related to this form of issuance.
