Last week Standard and Poor's Corp. released its second Structured Finance Market Observation survey, gauging the market sentiment on the latest hot topic on the consolidation front - Financial Interpretation No. 46, released in mid-January by the Financial Accounting Standards Board. This survey is a followup to last year's inaugural questionnaire, which determined that while structured-finance market participants were in favor of FASB's goals, consolidation was not the way to go about accomplishing them.
This year's survey asks market participants their opinions on the impact of FIN 46 and whether or not those within its scope will comply with the proposed regulations. Additionally, S&P asks, if complied with, will the consolidation proposal achieve the desired goals of increased financial disclosure and more prudent risk assessment?
"At this point, there is still a lack of clarity and guidance concerning how FIN 46 will ultimately impact certain areas of the asset-backed market," said Joanne W. Rose, executive managing director at S&P. "This edition of the SF Market Opinion will be an opportunity to help crystallize the perspectives of market players worldwide, giving them the chance to express their views on this critical issue. We at S&P, will then summarize and share those perspectives with the entire securitization community."
Last year's survey, the results for which were released July 30, 2002 (see ASR 8/5/02), proved quite prophetic, as many of the market's fears at the time have come to fruition in the Interpretation. At the time, 247 of the 305 respondents believed consolidation was not the correct approach to prevent improper use of SPEs. Now that FIN 46 has laid out its consolidation proposal for non-qualifying VIEs, S&P breaks down the impact by market segment in its questions.
Distributed last week to securitization market professionals, from its global database, S&P asked that responses be returned by March 20 and it plans to report survey results by early April.
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