ABS

While rating actions across the capital structure of many recent vintage CMBS deals will be considerable, mezzanine and super-senior ‘AAA’-rated classes should stay ‘AAA’ for the near term, according to Fitch Ratings. The rating agency continues its review of 2006-2008 fixed-rate conduit and fusion transactions.

GMAC Financial Services has named Jeff Lemieux, a hedge fund executive, senior vice president of fee based servicing.

Two-thirds of the AAA-rated private private-label MBS purchased by Fannie Mae and Freddie Mae have been downgraded to "junk," the GSEs' regulator told a congressional panel, and only a small portion is still rated AAA.

Cantor Fitzgerald has hired George Goncalves as the head of its fixed income rates strategy, the firm said today. In this new position, he will lead the firm’s effort to create a strategy team and develop new fixed income trading strategies.

The recent headlines on residential mortgage credit performance have remained gloomy. The quarterly delinquency survey published by the Mortgage Bankers Association (MBA) painted a pretty desolate picture of mortgage credit performance in the first quarter of 2009, and data from outfits such as RealTrac show continued increases in foreclosures, particularly in the Foreclosures Started category.

The European Securitization Forum and Information Management Network chose a more somber setting - London - for this year's Global ABS gathering held last week.

Regulators are shifting their view on securitization from being highly suspicious to realizing it is an integral part of the financial markets. Securitization industry players now see the importance of regulatory involvement to get the market back on track, said speakers at this year's European Securitization Forum/Information Management Network Global ABS conference.

The crowded halls of the new and - many hoped - temporary home of this year's European Securitization Forum/Information Management Network Global ABS gathering held in London last week could serve as a testament to the still-strong interest in securitization.

While ABS activity in Latin America is still slumping and the region lacks the aggressive repo programs of central banks in the U.S. and Western Europe, signs of hope are materializing.

The announcement last month that the European Central Bank (ECB) is supporting the covered bond market with purchases worth E60 billion ($83.6 billion) has added further momentum to the covered bond market.

With the first round of the Federal Reserve's Term Asset-Backed Loan Facility (TALF) for CMBS set for the end of June, market players remain cautiously optimistic that the program could add some much-needed momentum to the sector.

The most recent bankruptcy court ruling on May 13 for General Growth Properties' (GGP) Chapter 11 filing have upheld the separate legal structure of U.S. CMBS loan special purpose entities (SPEs).

The CEO of Kazakhstan's Alliance Bank, Makshat Kabashev, said in a conference call on May 29 that the originator's three DPR bonds, totaling $275 million at issuance, could fall into the scope of any of the proposed restructurings of the ailing bank's debt.

As the year got underway, expectations were for refinancing activity to surge as the Federal Reserve began its program to buy $750 billion worth of MBS with the aim to force mortgage rates lower.

This is the second of two parts of an article examining the dilemma confronting CLO mangers who wish to improve their portfolios by trading rapidly deteriorating loans for better-performing so-called "deep discount" loans. This portion focuses on the industry's call for reform and suggests solutions to this problem.

As 2009 approaches the halfway hurdle, the consumer confidence outlook looks a bit more optimistic, home sales have picked up and rates remain low, fueling refinancing opportunities. This has raised speculation across the U.S. over whether a housing market recovery is in sight.

Credit organizations, including Moody's, have been increasing measures aimed at diligently and continually evaluating the limitations of financial models and the assumptions and data behind them, especially with regard to structured securities. These steps can bolster the assessment of analytical uncertainties.

During the fall of 2008, circumstances surrounding the collapse of significant financial institutions and headline events such as the Reserve Fund's "breaking the buck" prompted governments around the world to take action and ushered in the current theme of proactive sovereign intervention. As part of this initiative, various government-sponsored programs were introduced, including U.S. CP-related initiatives such as the ABCP Money Market Mutual Fund Liquidity Facility (AMLF), the Commercial Paper Funding Facility (CPFF), the Money Market Investor Funding Facility (MMIFF), and the Straight-A Funding, LLC (Straight-A) programs.

ABS players are getting mixed signals.

Mortgage companies are scrambling to implement an over-looked Truth-in-Lending Act rule that goes into effect July 30 requiring timely delivery of the good faith estimate (GFE) on home purchases, refinancings, and home equity loans.