Securitization

Sentiment in the mortgage securitization market is improving, with pricing regaining momentum and talks of a new-issue RMBS pipeline rebuilding.

Brazil's Petrobras popped up on the ABS radar last year when a domestic deal came out that was backed by contracts between the oil giant and its suppliers. A receivable investment fund (FIDC), the transaction features senior shares rated 'AA(bra)' by Fitch Ratings and HSBC as the administrator. The deal is designed to facilitate the funding of small projects and services. A typical candidate would be a supplier that needs financing to assemble a machine for Petrobras.

You've booked the trade/priced the policy/granted the rating/set the reserves. So, the analytical heavy lifting is done, right? Not quite.

The European ABS market "shot out of the blocks" in early January with significant spread tightening in both "on-" and "off-the-run" names and across senior and subordinate bond classes at the same time.

ABS devotees involved in the emerging markets east of Europe faced headache after headache last year.

It's fitting that the ASF conference is being held in Washington, D.C. Uncle Sam, after all, has been playing a crucial role as securitization's savior as well as working double time to alleviate the problems plaguing the mortgage market.

The credit card ABS sector was reshaped in 2009 by a confluence of credit, funding, legislative, regulatory, and accounting challenges.Consumer credit quality deteriorated throughout the year, driven by a prolonged and severe economic downturn, rising unemployment and a lack of credit availability for consumers. As a result, Fitch's chargeoffs and 60+day delinquency indexes reached record highs during the year and remain elevated.

"There are snakes that go months without eating. And then they finally catch something, but they're so hungry that they suffocate while they're eating. One opportunity at a time." - Don Draper, Mad Men

The Treasury's ninth-hour announcements on Dec. 24 changed the outlook for the government-sponsored enterprises in 2010.

Latin American ABS and MBS held on last year thanks to domestic markets. As cross-border demand receded further, local investors remained a major force.

Despite troubles in the auto sector, dealer floorplan ABS have gained ground. Just last week Nissan Motor Acceptance Corp. came to market with its $750 million dealer floorplan offering. And for the January 2010 TALF subscription period, only Ford Motor Credit Co.'s floorplan deal was included. Another floorplan deal came down the pike in January - Morgan Stanley Resecuritization Trust 2010-F. Aside from the obvious rise of deal volume in the sector, rating agencies have also made revisions to their existing criteria to include the manufacturer's risk as it relates to the dealership networks.

Greece's liquidity and growing credit concerns with respect to the Portugal, Ireland, Greece and Spain (PIGS) sovereigns, has stirred rising concern about the potential consequences of a Greek shortfall for the European securitization market as a whole.

Despite troubles in the auto sector, dealer floorplan ABS are gaining ground.

Fitch Ratings has downgraded 1,186 bonds in 871 RMBS transactions that have had principal writedowns.

The Federal Reserve Bank of New York (FRBNY) and the U.S. Treasury Department initially rolled out the Term Asset-Backed Securities Loan Facility (TALF) program to revive the ABS market, but other sectors are also benefitting from the program, particularly CMBS, Standard & Poor’s said.

A Milwaukee County Circuit Court judge ruled yesterday that a lawsuit filed by five southeastern Wisconsin school districts against several financial firms over the safety of an investment involving synthetic CDOs can proceed.

The U.S. Department of Treasury said in a new report on the public private investment program that the nine funds participating in the program drew down a total market value of $3.4 billion of non-agency RMBS and CMBS as of Dec. 31.

Deutsche Bank has appointed Royal Bank of Scotland's (RBS) Paul Gardner as managing director and Asia-Pacific regional head of structured trade and export finance, effective immediately.

The U.S. Treasury announced some new measures aimed at increasing the number of trial home loan modifications becoming permanent.

The court ruling handed down early this week in U.S. Bankruptcy Court in New York on Lehman’s swap termination could have ratings implications for U.S. structured finance transactions that include swap agreements.