Unlocking the asset-backed securities market
Clearly, if there is going to be an economic recovery, securitization will have to play a major role. But one or two bond issues, even large ones like JPMorgan’s, or another a few weeks earlier by Citigroup and Goldman Sachs Group for $788 million of commercial mortgages, do not make a trend. The securitization markets are still way below the levels that were reached in the heady days of 2007, when $246 billion in commercial-mortgage securitizations were issued. This year only about $9 billion of new securities and refinancings were issued through September 30, according to figures compiled by Thompson Reuters. It’s a similar story elsewhere in the asset-backed world: Auto loan securitization is a bright spot with $38.5 billion so far this year, but that’s still below the $82 billion issued in 2006. Securitized bonds backed by credit card receivables are down to just $5.1 billion, compared with $99 billion in 2007. But the real disappointment is private-sector-originated residential-mortgage-backed securities, known in the trade as private-label RMBSs. There has been just one new private-label RMBS issue, worth only $238 million, in the two years since the market imploded. That compares with $789 billion of new issuance in 2006 alone.