Securitization

Manager Activity: AutosFull Credit to Book (Equal if Joint) U.S. Public ABS Market/144A Market

Over the last several months, Russia and other countries of the Commonwealth of Independent States have engaged in protracted battles to manage the depreciation of their currencies. Some have been more successful than others, but all have fewer resources to keep the fight going than they did only late last year.

The reinsurance industry got some surprisingly good news last month with a new CAT bond deal pricing. There was also the announcement of a new European product promising to increase transparency and boost capital market transactions in the near term.

Little has been done by way of loan modifications in the troubled U.K. RMBS sector.

The outlook for the securitization market in 2009 is bleak. Problems related to ABS are manifold and a recovery of the securitization market is not yet in sight. On the one hand, the future prospects of the securitization business highly depend on a stabilization of the financial industry overall. On the other hand, the credit cycle downturn will clearly test the solidity of European structured finance notes. Uncertainties related to ABS are high. An apparent example for the current market dislocation is the CLO sector - European leveraged loan CLOs are on the radar screens as undercollateralization is imminent.

Conditions in the U.S. mortgage backed securities market have improved, but the market still has a ways to go before it regains its pre-financial crisis vigor.

After several years of putting most of the multifamily mortgages they bought in their portfolios, Fannie Mae and Freddie Mac are preparing to rev up securitization of such loans.

At the American Securitization Forum's (ASF) conference last month held in Las Vegas, a survey presented in one of the panels showed that recovery for the U.S. securitization market won't happen until 2011.

With the worsening economic outlook, structured finance market participants have learned that it is necessary to read the fine print when it comes to managing their portfolios.

President Obama recently unveiled an initiative designed to support the housing market and reduce the catastrophic number of foreclosures. While the GSE-centric plan generally represents an incremental change from earlier programs, its controversial inclusion of a proposal for bankruptcy cram-downs may ultimately aid large numbers of homeowners by increasing the number of loans that ultimately are modified.

The Council of Mortgage Lenders (CML) confirmed continuing decline in the U.K. for buy to let lending.

EFG Eurobank Ergasias closed its €3.3 billion ($4.2 billion) Greek securitization of receivables. The transaction was arranged by Citigroup and Deutsche Bank.

Intercontinental Exchange, an operator of regulated global futures exchanges and over-the-counter (OTC) markets, announced that ICE Clear Europe will create a new service known as ICE Trust Europe.

Moody's Investors Service is again increasing its loss expectations for U.S. subprime RMBS issued between 2005 and 2007, raising them to a range of 28% to 32% of the original pool balance from 22% and placing 7,942 tranches of subprime RMBS with an original balance of $680 billion on review for possible downgrade.

Capmark Financial Group, Horsham, Pa., has a preliminary pre-tax loss of $800 million in the fourth quarter of 2008.

The Royal Bank of Scotland, which is now majority-owned by U.K. taxpayers, plans to “drastically scale back activity in structured real estate, leveraged and project finance, and exit lending in these areas entirely,” the bank said Thursday.

Steven Hilfer has joined Experian as senior director of business development to support the firm’s capital markets business.

The Federal Deposit Insurance Corp. (FDIC) concluded the sale of $1.45 billion of distressed performing and nonperforming residential and commercial construction loans using two private/public partnership deals.

Broadpoint Capital, a subsidiary of Broadpoint Securities Group, hired Chris Lau, Ryan King, Brian Horan, Joseph Lyons, and Mike Regan for Broadpoint DESCAP, its MBS/ABS and rates division.

Lender Processing Services (LPS) hired mortgage banking veteran Pete Maselli to the firm's office of the enterprise team as a senior vice president of strategy and business development.