ABS: an attractive, additional funding tool for banksPublicly placed issuance in the European asset backed securities (ABS) market through the first half of 2013 has totalled approximately €38 billion*, roughly equivalent to the average issuance amount over the past three years. Janus Henderson Investors | 05.08.2013 10:06 Uhr
It is not only the amount of issuance that is surprising, but also the number of different asset classes represented. In previous years UK and Dutch prime residential mortgage backed securities (RMBS) and German auto loans were the most commonly seen transactions. This year, however, while Dutch RMBS and auto loan issuance (albeit from various countries and not just Germany) has remained steady, UK RMBS issuance has fallen significantly. Making up much of the difference has been commercial mortgage backed securities and collateralised loan obligations; asset classes rarely seen post crisis prior to this year.
The re-emergence of diverse asset classes is important to the continuing development of the ABS market after the financial crisis. It also supports our view of the importance of ABS as an additional funding tool for banks and as a market which can provide attractive risk adjusted returns through investing in a diverse portfolio of assets.
*JP Morgan, at 1 July 2013
Edward Panek, Head of ABS Investment