Securitization

In their recent Consumer ABS Weekly, Citigroup Global Market analysts said that the eight to 10 basis point concession for two– to three-year equipment lease ABS is attractive versus auto ABS. They also expect more spread differential compression between these sectors.

Issuance of European CLOs may be stalled, but 3i Debt Management believes that once the macro-economic picture improves, these structured finance vehicles will resume their role as important players in the region's loan market. That was part of the rationale for the London-based firm's recent acquisition of seven European CLOs from U.S. money manager Invesco.

The Consumer Finance Protection Bureau (CFPB) doesn't have a direct mandate over the securitization industry, yet it is one of the biggest regulatory wildcards, particularly for deals backed by residential mortgages in the foreseeable future.

Securitization market executives may want to reconsider their summer vacation plans. Not only are significant rules stemming from the Dodd-Frank Wall Street Reform and Consumer Protection Act likely to be issued soon, but an earlier proposal amending Regulation AB, which had been put on the backburner, may be finalized over the next few months.

The TBA market is widely viewed as an essential element of a functioning mortgage market, serving as both the ultimate source of liquidity and a crucial pricing benchmark for housing finance. However, the market has evolved significantly over the last few years; a major change has been the growth of the specified pool sector. This column will examine this development and its implications for the MBS and mortgage markets.

The asset-backed commercial paper market, which is still less than a third of the size it was before the financial crisis, may be set to shrink even further.

ABCP looms large among the victims of Moody's bank downgrades on June 21. Some of these banks support ABCP conduits, which, in turn, saw their ratings drop. And in ABCP land, that single grade difference can make or break a conduit. It's because money market funds - ABCP's biggest investors - can only buy 'P-1' paper.

The handful of future flow securitizations, particularly diversified payment rights (DPR) securitizations, originated in Russia over the years have all been done as secured loan structures, typically by an offshore SPV issuing notes backed by a secured loan made to the originator.

In the ASR Scorecards database's preliminary public lead manager rankings for 2Q12, JPMorgan Securities grabbed the top slot with $14.5 billion sold and an 18.9% market share. It climbed one spot from 2Q11 with a 16.0% market share and $5.2 billion sold. ASR's 2Q12 numbers are as of June 26, while its 2Q11 numbers are as of June 30, 2011.

>Officially launched during the Global ABS confrence in mid-June, the initiative of prime collateralized securities (PCS) could provide the stimulus to issuance for which European players have been waiting.

Manager Activity: Autos Book Runner Amount (US$ Mil) Rank Mkt.

Prudential Investment Management has priced a $423 million collateralized loan obligation.

Proposed bank capital rules are likely to both benefit and crimp the securitization market, potentially making highly rated transactions less attractive while having uneven effects on different asset classes.

Investors appeared very much to play the range this final week of June - and a tight range it is. In the last half of June, the 30-year current coupon spread to 10-year notes has ranged between 106 and 109 basis points.

Lehman Brothers Holdings has completed the sale of its Aurora Bank unit, which concludes "a process that successfully avoided a potentially costly government resolution process of Lehman's two banks and that will ultimately yield significant recovery value for the Lehman creditors," a release from the bank said.

There were 63,000 completed foreclosures in the U.S. in May 2012 versus 77,000 in May 2011, according to CoreLogic’s National Foreclosure Report released today.

Amherst Securities Group (ASG) analysts in their latest Amherst Mortgage Insight talked about the recently approved Homeownership Protection Program (HPP), which allows municipalities to acquire underwater residential mortgages using the right of eminent domain. The program is a product of a resolution approved on June 19 by California’s San Bernardino County and its two cities named City of Ontario and the City of Fontana.

The Consumer Financial Protection Bureau (CFPB) is planning stronger disclosure requirements for reverse mortgages as more evidence emerges that senior citizens are using the product without fully understanding its main features and risks.

Credit card securitization is likely to surpass its $20 billion forecast this year, although the sector still faces competition from cheaper funding options, Standard & Poor's analysts said in an emailed report today.

An independent government watchdog has a sharp message for the federal agency that must decide whether to allow principal reductions on hundreds of thousands of government-backed mortgages: Time's wasting.