ABS

Blame it on the New York Giants' Super Bowl victory or a streak of luck at the blackjack tables, but panelists at last week's American Securitization Forum's annual conference in Vegas were optimistic about liquidity returning to certain parts of the ABS market, particularly the CLO space.

The industry must give priority to curbing abusive lending practices that have devastated the housing market and wreaked havoc on the securities market, Federal Reserve Board Governor Randall Krozner said in a keynote speech at last week's ASF 2008 conference held in Vegas.

Traditionally liquid triple-A products, European covered bonds have not escaped the credit market turmoil.

The U.K. is looking toward an early March implementation date for its new covered bond regime that uses a statutory framework instead of a contractual one.

An unusual deal from Russia came to light last week. The first public trade receivables ABS to be rated by Standard & Poor's, this transaction collateralizes factoring invoices that are denominated in rubles. It formally closed in December, but the parties involved apparently decided to go public with it a month later.

Thanks largely to the doldrums of the second half of the year, 07 marked a drop in issuance in those emerging markets that were 06's bright young things.

On a macroeconomic level, the Federal Reserve was expected to follow its 75 basis point reduction with another when it met last Wednesday. For the asset securitization market, however, it would take more than a rate reduction for investors and issuers to become comfortable enough to kick start the sector.

It was bound to happen sooner or later. January remittance data have finally left analysts struggling to find new ways to deliver the same old bad news.

While the House of Representatives' $146 billion fiscal stimulus package includes a plan to temporarily raise the conforming loan limits for Fannie Mae and Freddie Mac, the Senate will likely not follow suit.

Weeks after announcing poor 4Q07 earnings and massive write-downs, Merrill Lynch is making drastic cuts to its structured finance group.

Best of Times, the Worst of Times

The passing of 2007 marked a historic period in the U.S. student loan industry. An unprecedented amount of attention was directed towards student loan market participants in both federal and private programs. Business practices, underwriting, servicing and marketing practices were put under a microscope over the course of the year. As we enter the second month of 2008, education continues to be a hot topic in Congress with the presidential election fast approaching. Legislation passed in 2007 will begin to have its affects felt in 2008, with additional higher education reform proposals likely to follow.

The impact of the subprime crisis has been broad and deep on Wall Street. The consequent economic losses and personnel layoffs (which, as of this date, may be far from complete) seem to be worse than at any other time over the last 25 years - at least in so far as it has impacted the structured finance sector of the market.

As 2007 came to a close, MBS players around the world steeled themselves against subprime contagion. But Hipotecaria Total (HiTo) took a bold step forward unveiling a highly innovative, mortgage securitization vehicle in Mexico and issuing the first so-called Bonhitos on December 20. HiTo was founded barely a year earlier for the sole purpose of creating and sponsoring an efficient platform for the securitization of mortgages in Mexico.

Five months after a liquidity crisis halted trading on about one quarter of the outstanding paper in the Canadian ABCP market, banks have made several key changes that have drastically tightened spreads and opened the possibility of a global market for Canadian ABCP.

Brown Rudnick has brought together staff from its structured finance, bankruptcy and corporate restructuring and distressed debt practices to form a structured resolution group.

As market participants move forward into 2008, many have hopes of liquidity returning to the ABS market. To this end, increased deal transparency is paramount to bringing investors back into the space, market sources said.

Many view securitization as the culprit behind our subprime woes. However, the basic tenet of securitization remains a valuable financing tool whose benefits have yet to be fully realized. Though commonplace in the private sector, securitization is largely foreign to public finance, particularly in the troubled transportation sector. This article addresses the compelling case for applying securitization techniques to reduce airport financing costs for beleaguered airlines and helping address capacity constraints at high "origin and destination" airports such as JFK, LaGuardia, Newark and LAX.

Best of Times, the Worst of Times

As more banks realize the liquidity potential in European covered bonds, issuance volumes are expected to rise in 2008.