The face of European securitization changes on an almost daily basis. Solutions drafted to solve the lack of market liquidity have been done on a country-by-country basis.
With these as a backdrop, the securitization primary market has remained closed to new activity. Deals that come through are done on a retained basis, and secondary trading remains muted as well.
"Financials continue to benefit from the credit guarantees, government recapitalizations and the odd outright nationalization, all of which have been expressly credit-positive," said Deutsche Bank analysts. "Moreover, the money market freeze looks to be thawing, helped by the unparalleled central bank actions in recent weeks. Both the [European Central Bank] and [Bank of England] broadened their market operational frameworks this past week in terms of liquidity allotment and asset eligibility, with the latter also taking steps to de-stigmatize bank access to its new standing facility."
To be sure, the list of retained deals continues to grow. Last week, two Irish entities contributed to the growing tally of deals completed for central bank eligibility. Aldermanbury Investments announced its >582.6 million ($749 million) securitization of payments made by the Spain's Comision Nacional de Energia. The deal, dubbed Rayo Finance Ireland 1, will offer >75 million triple-A-rated Series 1 notes and >507 million triple-A-rated Series 2 notes.
Anglo Irish Bank is also set to complete its >3 billion securitization worth of loans to Irish property developers, shopping center owners and retailers in a bid to raise capital. On Sept. 30, 2008, Moody's Investors Service announced a rating of 'A1' on approximately >2.3 billion senior commercial mortgage-backed floating-rate notes due 2030.
These asset-backed securities were issued in the name of Proodos Funding Limited. Moody's has not assigned a rating to the further >750 million of subordinated commercial mortgage-backed variable-rate notes due 2030. This transaction is the fourth CMBS securitization of Anglo Irish Bank and is part of its ongoing liquidity and funding strategy. The notes have been retained by the bank and are eligible as collateral for ECB/market funding.
However, Australia is making some progress toward opening up its primary deal flow with a new public deal announced last week. FirstMac sold a small Australian RMBS for $173 billion at very wide spread levels, according to market reports. Another deal reported as being placed - but under a preplaced scheme - was Exeter Blue, a synthetic balance sheet Project Finance (PFI) CLO from Lloyds TSB.
"We expect the ABS market to reopen very gradually, but on a much smaller scale than before," said Jean-David Cirotteau, an analyst at Societe Generale.
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