Situational volatility has led some potential issuers in the esoteric space to opt out of structured finance and seek financing elsewhere, market sources said.
With uncertainty created by the sovereign debt crisis and no end in sight on when the U.S. economy will turn, esoteric issuers that have the option have turned to the bank loan market.
"If they have an option to get to financing faster and are worrying about the current volatility, that can push an issuer toward doing a bank debt rather than an unsecured private debt deal," said a market source who helps arrange these transactions.
ABS asset classes that have been impacted include whole business securitizations or the franchise-royalty type deals. Issuers in these areas are typically large companies that have market dominance and can potentially get decent bank execution.
"The landmark deal that set the standard several years ago before the meltdown, which was the Dunkin Brands deal, they refinanced all their structured debt with bank debt because they were able to do it," the market source said.