IMN ABS East Conference: Industry Looks for Another Re-set

This weekend, securitization industry professional will once again gather in South Florida for IMN’s Annual ABS East Conference.  The gathering is projected to draw some 2,600 issuers, bankers, lawyers, accountants and service providers, all very intent on observing these last few weeks leading up to the US Presidential Elections to see if there may be a renewed sense of urgency in Washington to finally clarify and in some cases, fix recent regulations aimed at this important industry.

Maybe it’s just us but the last several months sure seem to have been a drag on the momentum for repairing the markets that we and others were so bullish about earlier in the year.  Despite the strong rebound of issuance in several asset classes including several classes of ABS securities and CLO’s, there seems to have been a growing sense of inertia in the market over the past 20 or so weeks.  As an example, this past week’s Covered Bond event in New York, seemed to be more about “if and when” then it did “how and why”.

We have no doubt that much of this may very well be attributable to a “wait to see who gets elected” mentality at the US regulatory bodies.  Certainly, it is fair to suggest that whoever wins the US election will influence how the new rules will be implemented.  So it’s fairly easy to understand why people my take a wait and see view.  Other factors that seem to be at play include the ongoing lack of clarity associated with Basel III implementation.  Clearly, how the Basel rules are finalized and implemented will have a signficant and long-lasting impact on the structured finance industry, as it is the banks that drive the securitization markets both as issuers and investors.

Despite all the rhetoric, we are not so sure that the impact of either a Democratic or a Republican victory in November will have a material “1-2 year impact” on the regulations.  We do, however, agree with those that suggest that whoever is elected, the leading US regulators will be re-motivated to finalize the rules for the securitization industry and sticky wickets such as finalizing a plan for the unwinding of the GSE’s, all of which will bring a much-needed sense of clarity to the markets (and by extension, increase issuer and investor confidence).

In recent years, ABS East has been more of subdued wrapup to another disappointing year in the industry.  With the election looming and the anticipated impact it may have on clarity and confidence, ABS East has the potential to provide industry professionals with a good opportunity to re-set their plans and relationships in anticipation of better things to come in 2013.  We’ll be following the crowd.

About markferraris
Managing Principal Orchard Street Partners LLC

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