ABS
ABS or asset-backed securities are bonds or notes created via securitisation that are backed by a range of assets or receivables.
Generically, all securitisations can be labelled ABS and it is often used as a coverall term; in some cases in SCI, ABS will be used in this manner.
However, in many cases, ABS are taken to exclude mortgage-backed securities (MBS) and structured credit instruments, such as CDOs. If so, then asset-backed securities or ABS are taken to include consumer ABS, such as credit card securitisations, auto loan or dealer floorplan ABS, student loan securitisations, project finance/infrastructure securitisations and equipment leasing-based transactions.
ABS originators are typically loan issuers, such as banks, credit card companies, auto finance and consumer finance firms, but can be any institution that generates regular, quantifiable future income flows (or cashflows), which includes governments.
To create asset-backed securities, institutions sell pools of their loans to a special-purpose vehicle, or SPV, which then sells the loans to a trust. The trust then repackages the loans as interest-bearing securities and issues them. This true sale of the loans to the SPV ensures that the ABS is treated as being bankruptcy-remote from the originator.
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SRT Journal: A growth market
The fourth of five essays compiled in SCI's inaugural SRT Jo...
Mortgage insurance is as old as the hills, but the provision of financial guarantees or insurance policies on pools of home loans to secure capital relief as a tool of the significant risk transfer (SRT) market is of much more recent vintage. SCI looks at the growth and structural developments in the unfunded mortgage SRT market, but also the .......
News Analysis 25 November 2024
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Job swaps weekly: BBB elevates two to co-chief banking officer
People moves and key promotions in securitisation
This week’s roundup of securitisation job swaps sees The British Business Bank appointing two co-chief banking officers. Meanwhile, Latham & Watkins has poached an experienced White & Case structured credit executive as partner, while Centralis Group has hired a new Ireland Country head.
The British Business Bank has appointed Richard Bearman and Reinald de Monchy as co-chief banking .......
Market Moves 22 November 2024
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Leader of the pack
Digital securitization the star turn in 2024 and the future
News Analysis 21 November 2024
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Robust pipeline
Italian cash SRT market on the rise
Five Italian cash SRT deals closed in the consumer and auto loan space earlier in 2024 (SCI 12 July), and two recent announcements by Stellantis (Auto ABS Stella Loans 2024-2) and CA Auto Bank (A-BEST 25) bring the total to seven confirmed transactions this year for the jurisdiction. Three additional deals – Brignole CO 2024 and Brignole CQ .......
News 20 November 2024
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Variety rules in European ABS
October saw strong momentum in the European and UK ABS and MBS markets, fuelled by diverse issuance
European and UK ABS and MBS markets maintained momentum in October, building on the robust issuance pace set in September, according to monthly European and UK factsheets monitored by SCI.
TwentyFour AM Momentum Bond Fund’s managers state that October witnessed over €17.5bn in ABS and €9.5bn in CLO issuance, pushing the YTD total to over €130bn. Both TwentyFour .......
News 20 November 2024
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Asset migration
Euro mid-market deal flow set to grow
As year-end approaches, the private credit market is poised for continued expansion, with middle-market corporate deals expected to drive much of that growth. Speakers at Morningstar DBRS’ Credit Outlook 2025 in London last week outlined a positive trajectory for the sector, spurred by a global asset migration from public to private markets, maturing private equity portfolios and the overall .......
News 18 November 2024
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Job swaps weekly: Senior Pemberton CLO exec launches Auctus Strategies
People moves and key promotions in securitisation
This week’s roundup of securitisation job swaps sees a former Pemberton Asset Management director launching her own sustainability consulting business. Meanwhile, Atlas SP has given its interim ceo the role on a permanent basis, while Climate First Bank has appointed a former 12five Capital veteran as president of its newly-created structured finance division.
Ex-Pemberton Asset Management director Naomi .......
Market Moves 15 November 2024
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Italian revival
Private credit in real estate finance gaining traction
AXA IM Alts recently acquired a portfolio of Italian real estate loans from an international bank through a securitisation structure, while Société Générale has syndicated another portfolio of Italian real estate loan exposures to a leading international asset manager’s fund. Both transactions – for which A&O Shearman acted as advisor – signal that partnerships between banks and private credit .......
News 14 November 2024
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SCI In Conversation Podcast: Gregor Burkart, Enpal
We discuss the hottest topics in securitisation today...
In this episode of the SCI In Conversation podcast, SCI's Selvaggia Cataldi speaks to Gregor Burkart, leader of the refinancing division at Enpal, about the company’s recent milestone in Europe’s renewable energy sector. Burkart shares insights into Enpal’s first residential solar securitisation program, which raised €240m, and discusses the company’s strategy, innovative financing methods, and their impact on investors, customers, and .......
News Analysis 14 November 2024
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Zilch eyes zero-cost credit via ABS
Zilch paves the way for financial inclusion with plans for public ABS and IPO
In a bid to disrupt the revolving debt burden that impacts millions of consumers, London-based fintech Zilch is eyeing the next stage in its ambitious growth strategy with plans to expand its ABS facilities and eventually launch an IPO. The company, which says it has already saved customers £500m in interest fees since its inception four years ago, seeks .......
News Analysis 14 November 2024
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Job swaps weekly: Ogier snaps up Dublin-based partner
People moves and key promotions in securitisation
This week’s roundup of securitisation job swaps sees Ogier hiring a structured finance veteran from Matheson as partner in its Dublin office and promoting a real estate managing associate to partner in its Jersey practice. Meanwhile, Sidley has hired two long standing senior capital markets partners from Latham & Watkins, while Latham & Watkins has made a number of .......
Market Moves 8 November 2024
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Election special
As America goes to the polls and the world watches, US edito...
News 5 November 2024
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M&G unveils €200m ABS fund
Firm launches vehicle aimed at unlocking daily liquidity in high-grade securitised assets
M&G’s structured credit team has launched the M&G Investment Grade ABS Fund, a new daily liquidity fund with an initial €200m investment from pension schemes and family offices. The fund seeks to capture value in the global securitisation market, focusing on high-quality, investment-grade assets backed by residential mortgages, consumer, corporate, and automotive loans.
The fund’s strategy aligns with .......
News 5 November 2024
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NAV in focus
Growing market 'key' to fund finance toolkit
Net asset value (NAV) lending volumes are poised to more than double over the next few years. Indeed, panellists at Invisso’s recent ABS East conference forecast that the market could grow from nearly US$150bn in 2024 to an estimated US$500bn by the end of the decade.
NAV loans are becoming an increasingly relevant tool within the broader US$1.2trn .......
News Analysis 5 November 2024
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Pre-judgment day ABS rush in Europe
October sees strong European and UK ABS issuance ahead of US presidential election
October ended with a surge in European and UK ABS and MBS issuance, with €3.5bn placed from seven deals in the final week of the month. This included €2bn of publicly marketed deals, bringing the total level of issuance for the month to €12bn.
JPMorgan strategists note: "October’s primary activity underscores the strong demand for securitised products across .......
News 4 November 2024
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Job swaps weekly: Linklaters lures four A&O Shearman partners
People moves and key promotions in securitisation
This week’s roundup of securitisation job swaps sees Linklaters hiring four partners from A&O Shearman for its New York office. Elsewhere, the Prytania Solutions team has joined Houlihan Lokey’s structured products valuation advisory team as part of the latter’s acquisition of the former, while Danske Bank has snapped up a former senior Nordea executive as investment director.
Linklaters .......
Market Moves 1 November 2024
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Blueprint for sustainable growth
EIF's Jesper Skoglund and Georgi Stoev discuss EIB, EIF, and...
EIB, EIF and BPCE have collaborated on a new €800m financing initiative aimed at driving innovation and sustainability for SMEs. Structured as an ABS transaction, this joint venture is crafted to encourage significant lending to support European SMEs while fostering advancements in the green transition.
With €750m invested by the EIB and €50m by the EIF, the collaboration .......
News Analysis 31 October 2024
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C-PACE 'the winner'
Growing institutional interest, new market frontiers and leg...
With R-PACE uptake cooling across the US, industry leaders hailed C-PACE as “the winner” at Invisso’s ABS East conference in Miami last week. Panellists referenced a surge in deal volume, new market applications and a wave of institutional backing seen throughout 2024.
“We're seeing increased traction in larger C-PACE deals ranging above US$100m, where institutional investors use C-PACE .......
Talking Point 30 October 2024
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SCI in focus: Hot water
Thames Water, whole business securitisation and the challenge of debt financing
Crisis on the balance sheets of the UK’s largest water utility, Thames Water, is exposing major failures of the political, regulatory and financial systems – not whole business securitisation (WBS).
In late October, a court date was set for 17 December to discuss Thames Water's future. In the meantime, WBS remains centre stage in most conversations linked to .......
News Analysis 29 October 2024
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Yield-seekers' paradise
Esoteric ABS set to shine amid stable rates and digital surge, say Miami speakers
Esoteric ABS issuance has surged to represent nearly a third of the US securitisation market so far this year, reaching US$96bn of cumulative volume. At Invisso’s ABS East conference in Miami last week, panellists forecasted strong growth across niche asset classes through 2025 - with anticipated interest rate stability pushing investors towards the digital infrastructure, whole business securitisation (WBS), .......
Talking Point 28 October 2024