The Global Asset Backed Securities (ABS) conference starts today at the International Convention Centre, Barcelona.
Now in its 29th year, it brings together a worldwide community of parties associated with all things funding and securitisation to explore innovation and best practices, and of course to negotiate and agree deals.
Specialist lenders, banks, lawyers, issuers, investors and a whole array of suppliers and advisers involved in ABS attend. This year, a record 5,000 attendees have registered, showing the importance of the role of wholesale funding and structured finance within lending industries.
From a Phoebus perspective, our main interest is in Residential Mortgage-Backed Securities (RMBS), as many of our clients utilise wholesale funding to fund mortgage originations, and our servicing product handles the requirements and provides the data required to securitise.
MARKET STRENGTH
In relative terms, the UK securitisation market is strong with several transactions having taken place in the last year. Specialist lenders such as Enra, Keystone, Lendco, Molo and most recently Quantum have all achieved highly successful transactions. Aviva, one of the largest and most well-known later life lending providers in the UK also achieved a substantial securitisation transaction, and watch this space with other lenders in this marketplace set to securitise also.
When you compare the volume of transactions now to those pre-GFC, we are still way short of those, but in such a (correctly) highly regulated securitisation environment post GFC, it’s not overly surprising. The good news is that the regulators of both the UK and Europe seem to appreciate the strides the UK industry has made in tightening the risk belt and, very positively, this has been reflected in new legislation, “The Securitisation Rules 2024”, from last November which replaced the previous EU securitisation regulation that had been previously been retained under UK law. In theory, this should give more decision-making powers to the FCA, PRA and Treasury and is designed to encourage a more dynamic and streamlined securitisation process for the UK. Hopefully, effective UK self-regulation can give us more opportunities to be ahead of the curve in this crucial part of the funding market.
I worked on my first securitisation in 1989, and I’ve been attending this conference on and off for something like 20 years. In that time the basic principles of the RMBS market haven’t really changed. It will be interesting this week to hear from and speak with experts on any new ideas and innovations that may be on the horizon, but I suspect on the basis that transactions are being successfully achieved today, no major changes to the process are going to be forthcoming in the immediate future.
