Non-traditional ABS asset classes — including transportation asset leasing and timeshare — are on the road to recovery despite the economy’s depressed state, according to Standard & Poor's analysts.
In S&P's newest edition of CreditWeek, the rating agency’s analysts said that the transportation leasing business, mainly the aircraft, railcar and container sectors, experienced tough times in 2009.
The struggling parent companies of the major leasing firms including International Lease Finance Corp. and RBS Aviation Capital tried to find buyers for their leasing company affiliates despite the dearth of interested purchasers, S&P reported.
However, despite these drawbacks, the rating agency believes that there are some positive factors going for the sector such as investors’ risk appetite coming back.
This positive sentiment carries over to the timeshare sector where, despite the economic woes and without government support through the Term ABS Loan Facility or TALF, there was a flurry of new issuance in 2009. S&P analysts attributed the deal deluge to investor demand created by increased enhancement on timeshare ABS transactions.
These topics, along with other non-traditional asset classes, are going to be highlighted in today’s seminar sponsored by S&P’s structured credit team. The seminar will also feature outlooks from S&P’s Chief Economist David Wyss, Global Head of Financial Institutions Ratings Jayan Dhru and Global Head of Corporate Ratings John Bilardello.
In synch with the topics covered in the just-released of CreditWeek, the seminar will feature a discussion on cash flow CLOs. Participants will also be divided into several breakout sessions that will tackle the different esoteric asset classes including non-traditional future flow ABS, timeshare securitizations, transportation-related deals, insurance-related transactions, credit derivatives and structured counterparties and private equity and hedge fund offerings.
Peter Kambeseles, managing director and head of structured credit group, said that market participants from a previous meeting identified these sectors as points of interest and based on their feedback, the highlights for today’s events were selected. “In terms of the CLO market, we will address deal performance, the forward pipeline and will demo supplementary analytics as well,” Kambeseles said. Kambeseles and Global Head of Structured Finance David Jacob will both be giving the opening remarks at today's gathering.
Kambeseles said that he expects some growth in the non-traditional space, where S&P actually reviewed around 100 deals in 2009.
This growth is expected to happen despite the lack of monoline participation in and government support for the sector. The sustainability of these sectors are derived from, among other factors, the changing investor base.
“We have hosted roundtables where we established a dialogue with these investors,” Kambeseles said. He added that the composition of the investor base for non-traditional ABS has changed because of the absence of the monolines from the market, among other factors.