OVERVIEW
The global market for securitisation has slumped since September 2007
due to turbulence in credit markets, a lack of liquidity and a reduction in
investorsâ tolerance of risk. These difficulties were triggered by the subprime
crisis and compounded by the downfall of Lehman Brothers, as well
as the nationalisation of the US federal agencies - Fannie Mae and Freddie
Mac.
Furthermore balance sheets of many banks were weakened by
holding large tranches of mortgage-backed (MBS) and asset-backed
securities (ABS). This resulted in the recapitalisation of some banks in a
number of countries. Many of these overleveraged borrowers, including
banks and other investors, which previously accounted for at least two
thirds of global purchases of MBS and ABS, have exited the securitisation
market.
Gross global securitisation issuance showed a drop of about a third from
$3,817bn in 2007 to $2,777bn in 2008 (Table 1). However, the majority of
securitisation issuance in 2008 was retained within the issuing banks for
repo agreements in order to enhance liquidity and availability of credit.
Excluding securitisation retained with the issuing banks, which are not
included in the gross figures, net issuance sold into the market and purchased
by end-investors slumped by 79% from $2,138bn to $441bn (Chart 1).
Quarterly data shows issuance falling through 2008 from $149bn in Q1 to
$60bn in Q4. Dealogic figures on net issuance are not directly comparable
with gross data as they are compiled on a separate basis, but they flag up the
scale of decline in net issuance in 2008. Estimates for Q1 2009 point to
issuance remaining at a very low ebb.
http://www.ifsl.org.uk/output/ReportItem.aspx?NewsID=25
For further interest, you should listen ( 71 minutes ) to the Credit Markets panel held April 27th at the Milken Institute :
http://www.milkeninstitute.org/events/gcprogram.taf?function=detail&EvID=1630&eventid=GC09
Have fun !
The global market for securitisation has slumped since September 2007
due to turbulence in credit markets, a lack of liquidity and a reduction in
investorsâ tolerance of risk. These difficulties were triggered by the subprime
crisis and compounded by the downfall of Lehman Brothers, as well
as the nationalisation of the US federal agencies - Fannie Mae and Freddie
Mac.
Furthermore balance sheets of many banks were weakened by
holding large tranches of mortgage-backed (MBS) and asset-backed
securities (ABS). This resulted in the recapitalisation of some banks in a
number of countries. Many of these overleveraged borrowers, including
banks and other investors, which previously accounted for at least two
thirds of global purchases of MBS and ABS, have exited the securitisation
market.
Gross global securitisation issuance showed a drop of about a third from
$3,817bn in 2007 to $2,777bn in 2008 (Table 1). However, the majority of
securitisation issuance in 2008 was retained within the issuing banks for
repo agreements in order to enhance liquidity and availability of credit.
Excluding securitisation retained with the issuing banks, which are not
included in the gross figures, net issuance sold into the market and purchased
by end-investors slumped by 79% from $2,138bn to $441bn (Chart 1).
Quarterly data shows issuance falling through 2008 from $149bn in Q1 to
$60bn in Q4. Dealogic figures on net issuance are not directly comparable
with gross data as they are compiled on a separate basis, but they flag up the
scale of decline in net issuance in 2008. Estimates for Q1 2009 point to
issuance remaining at a very low ebb.
http://www.ifsl.org.uk/output/ReportItem.aspx?NewsID=25
For further interest, you should listen ( 71 minutes ) to the Credit Markets panel held April 27th at the Milken Institute :
http://www.milkeninstitute.org/events/gcprogram.taf?function=detail&EvID=1630&eventid=GC09
Have fun !