Europe private securitisation market gets a jump on the U.S.

Institutional Investor recently ran a nice little article about the recovery of the private securitisation markets in Europe; one that is apparently out-pacing the recovery of its U.S. counterpart.

The author points to the lack of competition in Europe from government agencies, like the GSE’s in the U.S. (e.g. Fannie Mae and Freddie Mac) as a primary reason for the more than 550% increase in new mortgage-backed issuance in the Euro-market over the first 9 months of 2010 compared to the same period in 2009. 

Granted, the US$50 Billion in new RMBS issuance is a far cry from 2006, when some $300 Billion was brought to market but we’ll take it, particularly given the paltry US$9 Billion that was issued in 2009.  The article describes activity in several markets and several asset classes.  All good signs, for sure.

However, the real “news” here is the fact that the investors with the largest appetite for these euro-securities seem to be U.S. Banks.  Yes, we said U.S. Banks looking for yield in an asset class that they understand!

Does this tell you anything?

Could it be that the lack of pace in the U.S. securitisation market’s recovery has more to do with a lack of confidence and certainty in new regulations such as Safe Harbor, Skin-in-the-Game and Fair Value Accounting than it does about competition from the GSE’s?

Are the FDIC, SEC and FASB listening?

About markferraris
Managing Principal Orchard Street Partners LLC

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