Regulatory and accounting changes that have been implemented, and proposals under consideration, have been primary drivers behind many of the recent innovations in the ABCP market. As ABCP conduit sponsors make adjustments to their programs in order to maintain off-balance-sheet treatment, manage regulatory capital, or minimize the cost of third-party liquidity facilities, Standard & Poor's has evaluated the impact of those changes on the credit quality of commercial paper issued.

In addition, Standard & Poor's has issued credit assessments that address the risk borne by credit enhancement and liquidity facility providers to ABCP programs. These credit assessments have been used in the syndication of liquidity, for internal risk management purposes, and to support the bank's position in discussions with regulators. The pace of innovation is likely to accelerate as the effective date for Financial Accounting Standards Board's FIN 46 draws near. Absent program amendments, FIN 46 threatens the long-term economic viability of many ABCP programs. Although the market's direction currently is uncertain, it is clear that market participants will be working overtime to find solutions that will allow sponsors to continue to receive off-balance-sheet treatment while maintaining the credit quality of commercial paper notes.

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