Isfl Securitisation Report 2009

Discussion in 'Economics' started by ASusilovic, May 10, 2009.


    The global market for securitisation has slumped since September 2007
    due to turbulence in credit markets, a lack of liquidity and a reduction in
    investors’ 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

    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

    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.

    For further interest, you should listen ( 71 minutes ) to the Credit Markets panel held April 27th at the Milken Institute :

    Have fun ! :)