With talks of Redwood Trust issuing a$200 million Jumbo mortgage securitization, as reported by the Wall Street Journal, industry experts are mulling what this means for the private label RMBS market.
WSJ said that the offering could launch as soon as this week, although Redwood itself has not comment on the deal.
In a Jefferies report, analysts said that the risk appetites have been increasing in private-label RMBS.
Specifically, there is a rising demand for not only 'AAA'-rated securities, according to analysts, but also for sub-'AAA'-rated securities or in the 'AA' and 'A' sectors.
"With extremely conservative underwriting practices and a focus on asset values, newly originated prime Jumbo loans are the ideal asset class to thaw the frozen private-label RMBS securitization market," Jefferies analysts said. "The first iteration of private-label securitizations is likely to be relatively small and have marginal impact to the securitizer's bottom line."
Analysts think that, as rating agencies, investors, and regulators regain confidence in private-label RMBS, the structure economics will slowly improve through the cycle.
Redwood Trust, which was established in 1994, is a financial institution that focuses its business on investing in, financing, and managing non-agency residential and commercial real estate loans and securities.