Although the securitization market is still struggling to regain its post-crisis footing, there are glimpses of hope. In this month's cover story, for instance, Nora Colomer explores a potential source of new deal flow.
Securitization might play a role in the greening of utilities. Nora looks at how complying with new regulations will cost the coal-fueled power plant industry more than $20 billion annually, a price tag that might be financed via ABS. In addition, securitization could be tapped for building energy efficient buildings and public works, among other projects.
This month we also look forward to 2013 in a series of articles. Notwithstanding the looming fiscal cliff and actual or potential regulatory obstacles, the year might end up being a fairly good one - at least for some key sectors.
For starters, U.S. CMBS may very well see more issuance next year than it did in 2012, Nora reports. She cites sources who predict that issuance of both traditional conduit deals and transactions backed by a loan on a single property could reach a combined $50 billion to $65 billion, up from about $45 billion projected for 2012. The upshot is that there's optimism that there will be enough fresh paper to refinance the wave of commercial property loans coming due over the next few years.
John Hintze looks at what's ahead for private-label RMBS, and also sees the likelihood for more brisk activity (although that's not a big feat given how slow it's been). Still, he says volumes could quadruple in 2013 from this year, while collateral is expected to remain healthy.
In a separate article, John finds reasons to be cheerful about consumer ABS as well, with the robust performance of deals backed by credit cards and auto loans expected to continue into next year. A particularly good sign is the arrival in this market of nontraditional investors. The appetite from corporate treasuries, for instance, seems to have gone up.
Due in part to the Eurozone crisis and to regulatory uncertainty, the picture in Europe is less rosy. Felipe Ossa reports that issuance is expected to be more or less flat in 2013 from this year, and many investors are likely to stay away unless regulators ease up on how much credit ABS and MBS are given in investors' liquidity buffers. There are reasons to be hopeful - such as the just launched initiative of prime collateralized securities (PCS) - but as Barclays puts it, the market is stuck in a state of "fragile equilibrium."
In this month's column, Bill Berliner examines housing's significance to MBS credit and prepayment performance. As MBS buyers keep an eye out for trends in national and regional real estate markets, recent data have indicated that housing is finally coming out of its slump. In his piece, Bill argues that investors and originators have to think about how a sustained housing recovery can affect the various MBS market segments.