Net Global Securitisation Down 79% in 2008
Net global securitisation issuance slumped by 79 per cent from $2,138bn in 2007 to $441bn in 2008, according to IFSL’s Securitisation 2009 report.
Gross global securitisation issuance showed a drop of about a third from $3,817bn in 2007 to $2,777bn in 2008. 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.
Quarterly issuance continued to fall through 2008 from $149bn in Q1 to $60bn in Q4.
There is little indication of a recovery in the first quarter of 2009. The global market for securitisation has fallen away since the autumn of 2007, due to turbulence in credit markets, a lack of liquidity and a reduction in investors’ tolerance of risk.
Thomson Reuters estimates for Q1 2009 indicate that securitisation remains at a very low ebb: US issuance of $20bn was slightly up on the $10bn in the Q4 2008, but well below $80bn in each of the first two quarters of 2008 and down on issuance of around $500bn a quarter between mid-2005 and mid-2007.
Some revival of securitisation in the US may emerge if investors are attracted by the design of the TermAsset- Backed Securities Loan Facility (TALF). The TALF is a $200bn lending programme created by the Federal Reserve that will provide financing for USentities that purchase newly issued ABS, including credit cards, auto loans and possibly commercial mortgages. While the facility could be increased to $1,000bn it has got off to a slow start with only limited applications in the first two months, partly linked to investor concerns about restrictions linked to taking up the loans.
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