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ABS

CLO Market Sees Consolidation Activity Surge

March 1, 2010 - At the onset of the credit crisis, market participants expected a wave of consolidation in the CLO market. The wave turned out to be little more than a ripple, with less than 5% of the CLO market making management changes during the last year and a half, according to analysts at Citigroup Global Markets. That, however, now appears to be changing, with several managers recently acquiring portfolios, and a number of others looking for buyers, sources said.

Banks Lobbying to Temper Impending ABCP Capital Rules

March 1, 2010 - Despite final rules published last month, banks running ABCP conduits are continuing discussions with regulators in an effort to temper new capital rules they say could shift assets to non-U.S. banks and potentially reduce what has been a successful short-term funding source for U.S. companies. "The requirements significantly increase the cost of being in this business, and they could shrink credit capacity," said Debbie Toennies,JPMorgan's head of conduit management and business development.

Govt. Tries to Solve the Problem Called HAMP

March 1, 2010 - Reports last week surfaced that the Treasury Department is contemplating changes to the Home Affordable Modification Program (HAMP), which has been widely criticized for being ineffective. There are several changes to the program that the Treasury is looking at, according to a document obtained by American Banker, ASR's sister publication.

Will Smurfit-Stone Set a Precedent for CLOs?

March 1, 2010 - CLO managers don't want the exit doors closed on them. Last month, a bank consortium syndicated a $1.2 billion exit loan for Chicago-based box maker Smurfit-Stone. The deal irked several CLO managers because its structure - it was set up to be funded two months after it closed - and lack of covenants effectively kept them from participating. The deal went on to be a hit, trading up after breaking on the secondary. And now some CLO managers wonder if the Smurfit deal will set a precedent and shut CLOs out of other exit loans.

The Search for Alternatives

March 1, 2010 - With new accounting rules, regulatory uncertainty, and wary investors making ABS uneconomical for issuers, pockets of the securitization market are paralyzed. Participants are forced to look at alternative funding sources, which Nora Colomer explores in this month's cover story. Solutions range from originators resorting to more club-like deals, where risk can be shared, to banks selling portfolios of whole loans to each other. However, nothing can replace securitization as the most effective way to promote mortgage growth and, at the same time, provide an efficient way for companies to shift risk.