The securitization industry is making a comeback led by the return of both commercial and corporate loans, said James Frischling, president and co-founder of NewOak.
The low interest rate environment is pushing investors to search for yield, while structured products are once again of interest for the attractive returns they offer.
"The combination of higher quality loans underlying the securitizations with greater scrutiny of the products coming from the heightened regulatory environment helped convince many investors to return to this market," Frischling said.
He added, "Add the deleveraging and forced liquidations of huge positions held by the banks and private equity firms and hedge funds stepping in with the necessary capital, and it’s clear why leverage and the search for yield may be the solution to problems caused by leverage and the search for yield."
Investors also are conducting far greater due diligence and leveraging third-party firms to validate both the collateral and structures of bonds.