ABS
ABS or asset-backed securities are bonds or notes created via securitisation that are backed by a range of assets or receivables.
Generically, all securitisations can be labelled ABS and it is often used as a coverall term; in some cases in SCI, ABS will be used in this manner.
However, in many cases, ABS are taken to exclude mortgage-backed securities (MBS) and structured credit instruments, such as CDOs. If so, then asset-backed securities or ABS are taken to include consumer ABS, such as credit card securitisations, auto loan or dealer floorplan ABS, student loan securitisations, project finance/infrastructure securitisations and equipment leasing-based transactions.
ABS originators are typically loan issuers, such as banks, credit card companies, auto finance and consumer finance firms, but can be any institution that generates regular, quantifiable future income flows (or cashflows), which includes governments.
To create asset-backed securities, institutions sell pools of their loans to a special-purpose vehicle, or SPV, which then sells the loans to a trust. The trust then repackages the loans as interest-bearing securities and issues them. This true sale of the loans to the SPV ensures that the ABS is treated as being bankruptcy-remote from the originator.
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Renewables prioritised
Coventry's PACE, solar efforts gain momentum
Coventry Structured Investments, a Los Angeles-based asset management firm specialising in niche debt and equity solutions, is set to purchase up to US$600m in residential solar loans under a forward-flow agreement with Almika Renewable Finance. The agreement reinforces Coventry’s prioritisation of renewables as key growth areas over the next six to 18 months, including the roll-out of its own .......
News Analysis 20 September 2024
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Job swaps weekly: EIF exclusive
People moves and key promotions in securitisation
This week’s roundup of securitisation job swaps sees SCI exclusively reveal that the European Investment Fund’s chief investment officer is retiring from his role after almost three decades with the fund. Elsewhere, Performance Trust Capital Partners has poached three executives from Pagaya, while ELFA announces its ceo is to step down from her role.
Alessandro Tappi is to .......
Market Moves 20 September 2024
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Resilience amidst volatility
European and UK ABS and MBS markets displayed resilience in August, despite widespread volatility.
The European and UK ABS and MBS markets in August demonstrated resilience in the face of volatility, according to monthly European and UK factsheets monitored by SCI.
August saw widespread volatility, which notably affected both primary and secondary markets. According to TwentyFour AM Momentum Bond Fund’s managers, despite this turbulence, primary markets demonstrated resilience, especially in the UK .......
News 20 September 2024
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Breaking regulatory chains
Calls for reform intensify as industry pushes to fuel growth and fund Europe's green transition
The European securitisation market is “far too small and illiquid,” according to a recent report from True Sale International (TSI) and the Association of German Banks (BdB). The scale of the challenges could be having a negative impact on vital innovation across the continent’s economy.
The report, titled ‘A strong, competitive Europe: unlocking the potential of securitisation’, underscores .......
News Analysis 19 September 2024
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Set for take-off?
Increased volumes, improving fundamentals boost aircraft ABS
A handful of US aircraft ABS worth US$2.87bn have priced so far this month, taking the total number of deals printed this year to eight. With improving fundamentals post-pandemic, the sector stands out when compared to railcar and container ABS.
Indeed, aircraft ABS currently offers the highest yield among the three asset classes, driving analysts’ preference towards this .......
News 19 September 2024
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Records to fall
European and Australian ABS markets approach post-crisis issuance records amidst autumn surge
Primary markets in Europe and Australia are showing significant momentum as we head into autumn. According to research strategists at JPMorgan, YTD issuance totals in both regions are nearing post-crisis records.
Europe’s YTD issuance stands at €71.5bn, with Australia at €32.9bn, just shy of their respective post-crisis records of €76.5bn and €33.
This has led the bank’s .......
News 18 September 2024
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Silver lining
Optimism around strong growth in RMBS and ABS at S&P conference
Market participants shared widespread optimism at S&P Global Ratings' European Structured Finance conference, buoyed by robust growth and the resilience of the European and UK ABS and MBS markets. Despite global economic challenges, issuance in these markets is experiencing strong momentum, performing even more favourably than 2023.
Panellists and attendees at the event noted that the primary beneficiaries .......
News 13 September 2024
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Prodigal student standards
Standard and Prodigy announce US$24m student loan partnership
Standard Bank has announced a US$24m funding partnership with Prodigy Finance to support African students intending to pursue postgraduate studies at international universities. The partnership includes US$22m from Standard Bank, with additional first-loss protection provided by Allan and Gill Gray Philanthropies.
Prodigy Finance, which provides flexible loans to international postgraduate students, will use Standard Bank's funding to expand .......
News 13 September 2024
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Job swaps weekly: Chatham AM appoints four for new CLO management team
People moves and key promotions in securitisation
This week’s roundup of securitisation job swaps sees Chatham Asset Management establishing a CLO management business with four key hires. Elsewhere, Freddie Mac has selected a new ceo, while Arini has named a CLO portfolio manager to replace Evangeline Lim, who is retiring from the industry.
Chatham Asset Management has established a CLO management business - called CTM Asset Management – with .......
Market Moves 13 September 2024
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Seeds of evolution
illimity's Lionetti answers SCI's questions
Tech-focused Italian banking group illimity recently announced the structuring of two new loan securitisation programmes to support SMEs and agricultural businesses in Italy, following on from the launch of its first securitisation programme last year. Claudia Lewis speaks to Fabiano Lionetti, head of investment banking at the bank, about its partnership with alternative-finance-focused fintech advisor Crescitalia and the evolution of .......
The Structured Credit Interview 12 September 2024
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Off to a flier
Busy week points to standout September for European and Australian ABS and MBS
As the third quarter of 2024 winds down, September is shaping up to be a standout month for the European and Australian ABS and MBS markets. According to a recent JP Morgan report, the ABS market roared back to life in the first week of the month, following a volatile August marked by recession risks and central bank uncertainty.
News 10 September 2024
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TGIF terminated as WBS manager
Market updates and sector developments
The control party for TGIF Funding Series 2017-1 has declared a manager termination event, following the failure of the manager - TGI Friday’s (TGIF) - to furnish a report of the independent auditors or back-up manager summarising the findings of certain agreed-upon procedures within a certain time period. The move represents the first instance of a manager termination event for .......
Market Moves 6 September 2024
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Job swaps weekly: The 'Art' of launching
People moves and key promotions in securitisation
This week’s roundup of securitisation job swaps sees two industry veterans join forces to launch Art Capital, a structured finance advisory business. Elsewhere, Citi has boosted its Oceania operation with a new head of asset-backed securitisation, while Cushman & Wakefield has hired a head of capital markets for the Americas from Five Horizons Partners.
Stuart Blieschke and Tim .......
Market Moves 6 September 2024
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SCI In Conversation Podcast: Mike Nowakowski, Conning
We discuss the hottest topics in securitisation today...
In this episode of the SCI In Conversation podcast, SCI US editor Simon Boughey speaks to Mike Nowakowski, md and head of structured products at Conning, about esoteric ABS and both the agency and non-agency MBS markets. Nowakowski discusses what attracts him to the esoteric space; the type of esoterics that currently offer the most value; potential upcoming tailwinds .......
News Analysis 3 September 2024
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Job swaps weekly: Norton Rose Fulbright adds Paris-based partner
People moves and key promotions in securitisation
This week’s roundup of securitisation job swaps sees Norton Rose Fulbright adding a partner to its banking and finance practice in Paris. Elsewhere, CBRE has lured a new executive director to its European debt and structured finance team from Rothesay, while Alantra has appointed a structured-finance-focused senior advisor.
Norton Rose Fulbright has strengthened its banking and finance practice .......
Market Moves 30 August 2024
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Backup power
Fallout from Gedesco deal could have positive impact on wider market
Servicer defaults can happen, and when they do it is important to keep operations running smoothly. However, this isn’t always possible, such as in the case of Gedesco, where broader struggles were at play.
Commentary from Morningstar DBRS earlier in August took a deeper look into the circumstances surrounding the servicer’s default in the Gedesco Trade Receivables 2020-1 .......
News Analysis 29 August 2024
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Gearing up
SRT Market Update
Heading into the autumn months, the SRT market is gearing up for a bustling end to the year, in spite of the volatility seen earlier this month. While the timelines for a couple of European transactions have been extended, Canadian and US bank activity is picking up pace.
Following a dramatic start to August, with a significant volatility .......
SRT Market Update 23 August 2024
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Diverging markets?
SRT investor-issuer relationships evolving
A common gripe among SRT practitioners is that the flood of new investors to the sector has suppressed spreads. However, some believe it has impacted investor-issuer relationship dynamics too.
According to one market participant, this difference in relationships is particularly pronounced between European deals and the deals which have recently been issued in the US. “While the main .......
News Analysis 23 August 2024
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Job swaps weekly: Texas Capital bags sales and trading MD
People moves and key promotions in securitisation
A quiet week for securitisation job swaps ahead of the UK’s August bank holiday. Nordea Asset Management is expanding its private credit presence in the Nordic region, while Texas Capital has beefed up its securitisation and whole loan capabilities.
Texas Capital Securities has recruited Craig Meltzer as md, sales and trading, based in New York. He focuses on securitisations .......
Market Moves 23 August 2024
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CLO analytics firm eyes private credit
Market updates and sector developments
Siepe has raised US$30m in a Series B funding round led by WestCap, which will drive a multi-product roadmap, including the expansion of the firm’s AI and machine learning capabilities. In conjunction with the new funding, Siepe has appointed Mark Schultis – who joined the firm as an advisor in October 2023 – as president.
The Siepe team .......
Market Moves 22 August 2024