A survey of European ABS investors published by Bishopsfield Capital Partners reveals a positive consensus supporting increased issuance in the asset backed securitisation public market.
The survey of 26 investment managers and investment advisers active within the European ABS market shows that caution among issuers and arranging banks for new public issuance does not extend to investors.
Sixty two per cent of respondents believe new issuance will be higher over the next 12 months than in the past year, while 80 per cent believe new issues will achieve stable or tightened credit spreads.
Given the spread range on three to five year AAA European RMBS has already tightened from 350 to 650 bps to 120 to 280 during the last year, the ccnfidence among investors who participated in the survey during the last fortnight implies a return to pricing last seen prior to the collapse of Lehman Brothers.
“Whilst pre-sold and privately placed deals continue to dominate the European securitisation market, it appears the cautionary stance of issuers and arrangers is not shared by the investment community – which bodes well for the prospects of a further recovery in public ABS markets,” says Mike Nawas, partner of Bishopsfield Capital Partners.
The confidence of European ABS investors is also reflected in relation to governmental intervention. The majority of survey respondents do not see a need for a US style Term Asset Lending Facility programme to kick-start the European ABS public market. Only a minority of survey participants indicate a preference for fresh new issuance. The majority of ABS investors are equally happy to consider relative value among existing issuance, versus more thinly priced but firmly untainted primary issuance.
The survey also shows that European investors are reducing their reliance on ratings, placing additional emphasis on their own credit analysis.
