ABS Issuance is doing fine, thx for asking, but it’s all happening in the non-US world.
While U.S. issuance is recovering modestly, down 75% yoy, non-US issuance is up 65% yoy.
As of march 26th 2009
Source: Asset-backed alert
Add:
The chart below shows monthly ABS issuance since january 2001
Blue: U.S.
Red: non-U.S.
Related:
ABS Issuance
The UK banks do have access to the ECB if they have a branch in the zone, if Northern Rock had been set up in time they could also have accessed the ECB but they weren’t…had to wait for Mervyn to wake up…
“# 4 -jck Says:
March 28th, 2009 at 5:12 pm
I guess the U.K. is part of the non-U.S. world”
My post was a rejoinder to Sean’s, just to illustrate that the Eurozone is not the only place this is happening. (Could be that some UK banks have access to the ECB through branches/subsidiaries located in the Eurozone.)
I have no doubt that a lot the stuff ends up being funded by the ECB or the BofE, but this is quite different than purchases by the Fed, with the purchases the Fed is taking the credit risk on board while funding leaves it with the bank pledging the collateral. With the TALF and the Geithner plan, the US is trying to do what the ECB and others have been doing all along, so far with limited success if we look at the numbers, and limited scope for future success if sticking to AAA(???) paper (for the TALF), they will need to go down market if they want issuance to revive.
Sean’s color suggests that the non-U.S. ABS market has not revived but depends on central bank support for its existence. And in looking at Carlomagno’s issuer list, it appears that the issuers showing the highest y-o-y issuance are closely tied to the housing sector. As there is no Fannie-Freddie equivalent in Europe-U.K. markets, we should maybe look at these numbers as similar to what the Fed is doing with Agency purchases; a central bank trying to put a floor on house prices, not necessarily a healthy and functioning market.
The total absence of new U.S issuance also suggests that a great part of it was concentrated in securities collateralized by marginal mortgage products (jumbo, alt-a, subprime, CDOs of same, etc.). If so, 50 cents on the dollar is probably a stretch. I’m not sure Geithner’s leverage scheme is enough to find buyers of this now-stranded paper.
Again, thanks for tracking this and thanks to commenters for the additional info.
I guess the U.K. is part of the non-U.S. world, but it is interesting to note that the country most dependent on securitization, the U.S. because of the relatively small size of its banking sector, is the one that has so far been unable to revive the market.
UK issuance is also sharply up, probably for similar reasons. Check out some of the Y/Y increases for the major individual players here:
http://www.abalert.com/ranking.php?rid=1753
What you’ll find is that the vast majority of non-US issuance goes straight into the ECB repo facility. Some European banks are becoming totally reliant on ECB repos, and bonds that are in that facility are priced way above where they would sell in the secondary market. So if that facility goes away expect huge losses.
wow, thats interesting, who (primarily) is picking up the slack?