Standard & Poor’s predicts that the volume of outstanding structured finance securities in the U.S. as a percentage of GDP will fall to the 23%-25% range by the end of 2011, the weighting it had in 2003-2004.
Presently, the share is 30%. On an upbeat note, the agency said a smaller outstanding volume, in both absolute and relative terms, should buoy up pricing. In addition, S&P characterized the new normal as “more sustainable” than the levels witnessed during the height of the structured finance boom.
The outstanding volume of structured finance securities currently amounts to $4.38 trillion, from $5.45 trillion at the end of 2007, a 20% decline. The main drag has been the beleaguered non-agency RMBS sector.