Positive sentiment coupled with the growing wall of money had created a one-way market: issuers expected a historic print on each new issue while syndicate managers' most onerous task was allocations. Some market traders had begun to question the wisdom of playing at all in a bid-only environment. With five-year prime UK RMBS squeezed to an unsustainably tight Libor plus 7bp in mid-March, investors scented an opportunity to seize the momentum. Buyers of senior RMBS tranches, the core component o

Although the proposal addressed the master trust structures – acknowledging that they fell within the definition – critics argued that certain stipulations about revolving periods and the type of assets backing notes were inconsistent with that definition. In particular, the proposal excluded revolving periods over one year and the pooling of additional assets during the revolving period in excess of 50% of any intending offering. Further questions were raised by UK market representatives regard

Government Housing Loan Corp’s (GHLC) presence in securitisation is on a growth path. It has relaxed its definitions as to what constitutes an eligible mortgage loan for use in securitisation, while a need to repay the loans extended to it from the government's FILP programme promises an additional wave of issuance over the coming years. GHLC's plan to become an "administrative institution" during FY2006 is contributing to a policy change. In its new guise, the GHLC will not participate in the m

The spread-tightening in Australian MBS over the past six months has been dramatic – so much so that many domestic investors fail to see good value on offer and have taken a back seat to European and Asian buyers. Australian investors' participation levels have accordingly sunk to alarming lows. Many on the buyside locally are hoping that once the current offshore mania for Aussie MBS passes, spreads will return to more “normal” levels and they will therefore be able to re-enter the market. But

Though Indonesia was one of the hot markets for Asian ABS before the Asian financial crisis – with at least six deals in a couple of years – none have emerged since, as until recently no one had been able to structure a product that met the originators’ needs. Indonesian corporates have been keen to issue ABS but were not interested in offshore deals because of currency risks or being unable to find banks willing to provide swaps. The alternative – issuing a domestic ABS denominated in rupiah –

The search for yield after an 18-month period of significant spread-tightening across all subsets of the CDO universe has prompted more and more complicated structures. Meanwhile, surging demand for structured credit products, significantly from many investors that are new to the sector, has sparked fears that some are getting in over their heads, while the concentration of associated credit derivative risk is giving regulators plenty of food for thought. “Portfolio drift, leverage and investor

The ABS market largely shrugged off S&P's recent downgrades of GM and Ford to BB/B-1 and BB+/B-1, respectively, from BBB–. But given the newly acquired junk status, the automakers' increased reliance on the securitisation market for funding has already been anticipated and factored into the market, analysts say. According to Brian Zola, auto ABS analyst for Lehman Brothers, "We estimate Ford Motor Credit and GMAC could require US$20bn to US$25bn each of auto ABS issuance through 2005. The term A

While the effect of CDO managers playing in subordinated tranches is well documented – and so too the emergence of B note investors in commercial property financings – the development of a market for unrated cash securitisation is a newer phenomenon. The last 18 months have seen a raft of changes to the ABS environment, the broad intention of which has been more accurate assessment of risk – and a more complete transfer of that risk into the capital markets. This has driven issuers and investors

Europe's securitisation sector is at a crossroads, and not just because the end of the reliance on residential mortgage backed securitisation – especially of the UK variety – could be in sight. That the credit cycle may have turned is being espoused in many quarters. Once, all that syndicate officials needed to predict a new issue's spread was to deduct a basis point from secondary market comparables. Primary market execution is now much more than simply working out how to scale back allocations

Competition has never been more intense in the securitisation business in Asia ex-Japan and Australia. Over 15 international investment banks have ABS teams in the region, with something like 80 professionals working directly on the product. This excludes the numerous houses confined to their own domestic markets. Not surprisingly, therefore, the fees on offer from ABS have fallen further in the last year or two from the already modest levels of earlier in the decade. “Even in the early days, AB

Searching for yield, investors were more receptive to less traditional products late last year and early 2005, including corporate bond-linked synthetic CDOs where the collateral is largely investment-grade credit default swaps (CDS). The product offers participants a short position when they feel the market is too expensive. While popular in Europe and Asia, the US market is just now coming around to embrace the product. It is not possible to soundly estimate the size of the closed market, but