BARCELONA - Germany is gearing up to become the next big European playground for investors seeking new assets to securitize - as well as a gateway to Eastern European opportunities. German investors are seeking efficient funding sources for business, government and consumer spending needs, among other areas, panelists said.
"Germany is a sleeping giant," said Iain Barbour, global head of securitization at Commerzbank Securities. "In many ways, it is the largest economy in Europe. Everyone in the market is focused on it right now...how to enter that market," he added.
According to Barbour, Germany's mortgage industry, one of the largest in Europe, is a particularly lucrative unpicked fruit in the market. Securitizations out of the country are currently at a pace of about 20 billion ($24.2 billion) annually, but in the next three to five years, that number could jump to three to four times that amount, he said.
David Dubin, a managing director at MBIA, said Germany has a substantial need for municipal funding for such projects as metro and light rail improvement, and pointed to the increase in corporate restructuring that took place in the U.K. in 1998 and 1999 as a parallel situation to where its economy is currently situated.
"The question is whether this will be capital markets funded," Dubin said.
But, Georges Ruchti, who sits on the board of Eastec AG, said a lack of standardization and the absence of data for structured products in Germany currently holds it back from the ability to securitize en mass. And Jean-Claude Khoury, director of asset-backed securitization at HVB Corporates & Investment Banking, said in particular, German banks are sitting on a large amount of commercial loans - but the assets were not created with securitization in mind - accounting for the main reason the market has not seen the volume there.
"Once you get into complex property transactions and nonconforming loans, there is no getting around the need for data," Ruchti said, however adding, "We see big U.S. servicers moving into Germany with a lot of capital, and Eastern Europe is not far behind," he added
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