With only $16 billion in issuance in January, the U.S. market for new securitizations fell by $2 billion from December and is less than half of the new structured finance supply from January 2015, according to a Standard & Poor’s.
In its monthly structured finance report, S&P said new deals for asset-backed securities, commercial- and resident-backed mortgage securities and collateralized loan obligations have been constrained out of the gates. The report cites economic volatility of fallen oil and gas price and concerns over global economic activity, along with market uncertainty over the Fed’s expected rate hikes this year, upcoming regulation and reduced bond liquidity.
Last January, the market saw $34 billion issued, in a year that ended with $436 billion in new securitizations come to market.
S&P has forecast an issuance of $465 billion in securitizations in 2016, topping the $462 million issued in 2014.
The slow start certainly puts the market behind pace from the issuance levels S&P has forecast for each category of securitization, but the ratings agency notes the “January is typically a below-average issuance month,” the report stated, “and that structured finance markets appeared to start a little later than usual this year.”
The market buoyed by a growing pipeline in the CMBS sector and in autos, with $7 billion in new vehicle-backed loan securitizations in the first month of 2016.
S&P expects $200 billion in ABS in 2016, and $125 billion in new transactions for CMBS-related activity.
Asset-backed securities accounted for $11 billion of the new issuance, with most of it auto-related. Another $3 billion was issued in CMBS, and $1 billion apiece for RMBS-related pools and $1 billion in CLOs.
RMBS issuance is down 80% from this time a year ago when $5 billion was issued; CLOs are down 75% from the January 2015 total of $4 billion in new deals.