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Feature: The death of ABS?
29 April 2010
Securitisation is too good an idea to be thrown away so the asset backed securities (ABS) markets definitely have a future. But as they are still suffering from post traumatic shock what it will be is still uncertain.
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Asset back securities
ABS
US
mortgages
securitisation
The epicenter of the recent financial crash was in the securitised US housing finance market, so it is not surprising that the ABS markets were the most severely dislocated of all financial assets. But whilst they had appeared to have almost died during 2008 and 2009, barely kept alive through emergency care by the central banks, some signs of life are now returning according to Tom Graf, Managing Director of Structured Products at Standish Mellon Asset Management in Boston. However, the ABS marketplace in Europe is a very different environment to that of the US and there are still substantial differences between the US and Europe in the prognosis for the future health of their respective ABS markets.
In the US, securitisation is a critical funding tool to finance consumer spending, with a large fraction of all consumer loans financed in this way by long term investment institutions. As a...
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