What is interesting about ABS issuance is that U.S. issuance, where authorities have done more than anywhere else to “promote” liquidity, has completely collapsed down about 95% yoy, while non-U.S. issuance is up 50% yoy.
Source: Asset-backed alert
this is due to repackaging of foreign ABS into US dollar denom assets so they can be put back to the FED. Win-win for the banks, lose-lose for the USD.
The ECB is more liberal when it comes to eligible collateral, they will take anything down to BBB- albeit with healtly haircuts, except for ABS which was tightened back to AAA at issuance vs A- previously, for securitization post-march 1st 2009. The dollar swaps are shrinking so the worse is probably over for dollar securitizations held by euro-banks, but there is definitely some furious repacks for euros paper.
Right on. But I’m not sure how much more help our poor currencies can stand.
I had, however, the impression that Bernanke’s menu of acronym-dense facilities opened the Fed up to accepting a whole new range of collateral themselves, for the purpose of what the rest of the world seems to achieved, a semi-functioning securitization market.
Maybe the ECB haircuts are less punitive? Scope of paper a little wider? But that doesn’t really square with the ECB’s generally more hawkish stance………
Or maybe the Euro banks are furiously repackaging their huge inventories of dud paper while they still have access to the Fed’s dollar swap facilities?
Not looking for answers, just musing on the state of our complicated little world.
I suspect so, the ECB has been taking ABS as collateral for years, it helps.
OK……that’s a surprising number.
Are European banks the issuers?