Securitization Market Path To Recovery Open To Debate
By Anusha Shrivastava Of DOW JONES NEWSWIRES NEW YORK -(Dow Jones)- The consumer loan-backed bond market has had a bumpy ride in recent years.
To discuss its future, about 1,900 securitization professionals are heading to Miami for the 15th annual Asset-Backed Securities East Conference, beginning Oct. 25.
With banks bundling loans on mortgages, autos and credit cards into bonds for sale to investors, the securitization market fueled the lending boom as the costs of borrowing fell for consumers. As the bulk of these loans were off bank balance sheets, underwriting standards loosened and risk was mispriced.
Investors drew back last year, wary of buying assets whose underlying collateral's performance they became unsure of. As a result, the market, which is essential for the flow of credit, froze, and the Federal Reserve had to step in with a program to revitalize it.
The advertised theme of this year's three-day conference, organized by the Information Management Network, provides clues to what is foremost on participant's minds: "Navigating a Path to Recovery."
"We've moved beyond whodunnit to how we will bring securitization back," said Jade Friedensohn, senior vice president of structured finance for IMN and the producer of the conference.
The mood - and attendance - at last year's conference was low, she said, noting about 1,200 participants came.
"Last year, it was a post-mortem," she said, adding "this year it's about how the industry will recover."
Session topics include assessing the impact of the Fed's Term Asset-Backed Securities Loan Facility or TALF, through which the central bank gives investors cheap loans to buy newly created ABS and new and existing commercial mortgage bonds. The program is scheduled to end in March.
Other themes are new pricing and valuation strategies, improvements in transparency and rebuilding of investor confidence, rating agency reform and regulatory updates.
A change to accounting rules in January 2010 will prevent issuers from moving assets off their books via the asset-backed markets, which could slow the recovery by crimping bank lending and increasing the cost of borrowing for consumers. This would also weigh on economic recovery.
There will be discussions on the tools available for conducting due diligence on mortgage-related assets, the importance of securitization in rebuilding U.S. capital markets and the valuation techniques for distressed assets.
"At our booth, we will be discussing our acumen in evaluating portfolios," said Dan Nigro, an asset-backed portfolio manager at Dynamic Credit Partners in New York. "Overall, we are trying to network and meet the best minds in the business."
Nigro reckons the mood at the conference may not be terribly upbeat given the backdrop of a weak economy. Still, it will be a good place take the pulse of investors and emerging trends in the world of asset-backed securities.
"We can all sharpen our skills and spread knowledge about the market," he said.
-By Anusha Shrivastava, Dow Jones Newswires; 212-416-2227; anusha.shrivastava@dowjones.com
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Publié le 23 octobre 2009 Copyright © 2009 Dowjones |
