But the technology is too proven and the amount of good assets available too large to keep this asset class down for long, according to the winner of this year’s Securitisation House of Year.
“If you look at the supply and demand dynamics, once the system unblocks there is a lot of liquidity that is still very interested in this technology,” says Lehman Brothers’ Amany Attia, head of securitised products for Europe. “In the US, we are already seeing credit card and other high-quality asset-based products being priced. Volumes may not be as high as they have been recently, but the market will soon recognise quality assets.”
Aside from all the hallmarks of a first-class platform – client-focused secondary trading and market making, top ranked structured product research and a commitment to providing liquidity in new products, such as CDSs based on ABS – Lehman has been at the forefront of developing new markets. For example, this year it was sole arranger and lead manager on the castellana finance, the first ever synthetic securitisation on the Spanish market for Bankinter. In 2006, it executed the first securitisation of residential mortgages in Japan, and was sole structuring adviser on the first whole business securitisation to provide 100% of the financing for an LBO in the US.
“The whole business securitisation for Dunkin’ Brands [the US deal] represented a new way of thinking about using securitisation as a tool,” says Ms Attia. “Among its benefits, it provided the sponsors with dramatically lower interest costs and greater flexibility.”
The current conditions will bring many long-term benefits to the market, says Ms Attia. For one thing, spreads will move to a point where people are rewarded for doing the work required to understand the product, she predicts; and the market will have to be a lot more transparent. “Lehman is trying to make more analytic tools available for clients that help them to understand the assets and their risk-reward structure better.”
