TALF Popularity Rises

Investor interest in the asset-backed securitization market reached a record high yesterday in the Federal Reserve’s records. The Federal Reserve Bank of New York late Tuesday said it received $11.45bn in additional loan requests by investors interested in participating in the Term Asset-Backed Lending Facility (TALF). These requests, if granted, put billions of dollars into the hands of institutional investors to buy up new ABS within certain categories, in turn encouraging more lending and securitization, which regulators say will keep credit flowing. Investors requested $3.31bn to support the issuance of auto-related asset-backed securities (ABS). The Fed received another $6.22bn in requests for loans to buy credit card-related ABS. Investors requested $81.47m to purchase ABS collateralized by Small Business Administration-guaranteed loans and $227.53m to buy ABS collateralized by student loans. A relatively small percentage — 4.3% or $494.5m — of Tuesday’s total requests were made on behalf of residential mortgage servicing advances. The June 2 facility marks the single largest volume of TALF loan requests. On May 5, the Fed reported receiving $10.6bn in requests. The Fed received $1.71bn in requests on April 7 and $4.7bn in requests on May 5, indicating confidence in the facility might be on the rise. Write to Diana Golobay.

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