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November 24, 2008 - The dramatic reversal of fortune for commodity exporters, induced by a plunge in prices and the global liquidity crunch, has altered the terms of financing for a sector that benefited handsomely from the market trends of the last several years. The question is whether they've altered enough to revive the export-backed deals that were a viable funding option before easy money and sky-high prices made them obsolete. While in the near term such a change seems unlikely, the conditions next year will arguably be more auspicious for this sector of ABS than they have been since 2004. 'We've been talking to a lot of investors about what they'd like to see when the markets come back,' said Reggie de Villiers, head of Latin American securitization at Merrill Lynch. 'One thing we've heard is secured export notes.'
November 24, 2008 - The European Commission (EC) disclosed its proposal for regulating credit rating agencies, following calls for regulatory oversight of these companies. The regulations aim to impose rules that address four main areas: conflicts of interest, quality of the ratings and methodology, transparency, and consistent regulations among European Union (EU) countries.
November 24, 2008 - Moody's Investors Service's recent lowering of Ambac and MBIAs' ratings to 'Baa1' spurred a massive flow of downgrades. The European CMBS sector has been especially hard hit. It saw downgrades from all three rating agencies over the past week.
November 24, 2008 - Mortgage volume was running substantially below normal through midweek with spreads steadily widening despite buying support from money managers, hedge funds, banks and the U.S. Department of the Treasury. Factoring into the poor performance was CMBS widening as a result of the probability that two JPMorgan commercial loans originated last year were likely to default. This added to investor concerns over the financial crisis extending into another sector. Since the economic slowdown affects consumer spending, this is expected to, in turn, impact hotels, offices and shopping malls.
November 17, 2008 - The new Spanish government fund Fondo de Adquisicion de Activos Financieros (FAAF) will start operations this week. The fund is intended to strengthen domestic bank liquidity through asset purchases, with Cedulas or Spanish covered bonds playing the leading role. 'FAAF is intended to strengthen the liquidity of Spanish financial institutions through asset purchases, in order to stabilize the supply of credit to the private sector and to Spanish companies, which [have been] hard hit by the economic downturn,' Dresdner Kleinwort analysts said. 'It is not a refuge for nonperforming securities, however, but only accepts highly rated papers. Cedulas will play the leading role in this respect.'
November 17, 2008 - The Spanish government announced the launch of a mortgage deferral measure to aid unemployed, old-age pensioners and self-employed borrowers struggling to pay their mortgages. Although the move could potentially bailout a significant number of struggling homeowners, there could be a potential downside for existing Spanish RMBS deals. 'If we assume that the reported government estimates of 500,000 borrowers end up using the scheme and they all defer the maximum >500 ($625) a month from day one, the total guaranteed deferred payments would amount to >6 billion or some 2.2% of Spanish GDP over two years,' Deutsche Bank analysts said.
November 17, 2008 - Aggressive rate cuts over the past week - the Bank of England's (BofE) 150 basis points easing along with the European Central Bank's 50 basis points cut - are likely to improve loan affordability in existing household credit. However, the cuts might not be enough to curb the downward cycle in highly levered European housing markets, experts said.
November 10, 2008 - An announced merger between Brazilian banking behemoths Banco Itau Holding Financeiro and Unibanco-Uniao de Bancos Brasileiros has reverberated through Sao Paulo's financial sector, as the move would produce the country's largest bank. As of September, the combined assets of the two giants totaled R$575 billion ($271 million), accounting for roughly 20% of the local banking system.
November 10, 2008 - European credit card securitizations could start feeling the heat as continued economic deterioration places further performance pressure on transactions that have, until now, withstood the turmoil. The deals have not escaped performance shortfalls during the first eight months of 2008 and Fitch Ratings said that problems have generally reversed improvements seen in 2007.
November 10, 2008 - American politics took center stage last week, but the message President-elect Barack Obama had for U.S. citizens could be applied across Europe as well. It took nearly a decade to create the market dynamics that have resulted in the present economic situation, and it will, consequently, take some time to get out of this mess. Obama, on the campaign trail, has said that Americans will have to tighten their belts in the meantime.
November 3, 2008 - The insurance-linked securitization (ILS) market is beginning to feel the credit pinch as malfunction in the financial markets touches every corner of the economy. Even insurers are finding that where they once added value for investors looking for some shelter from the wider securitization market, they've now become part of the problem.
November 3, 2008 - The U.K. government announced new rules that will better protect homeowners facing repossessions. This after a call from several U.K. charities highlighted that nationalized banks were aggressively and recently pursuing the option. The 'Pre-Action Protocol' was published by the Civil Justice Council last week, following a lengthy consultation process with industry participants, consumer rights groups and government ministries.
November 3, 2008 - Moody's Investors Service said last week that the industrial property markets remain rather resilient in terms of supply/demand and vacancy rates, but the supply and demand volatility ratios indicate transition risk in some markets. These findings were published in the rating agency's update on the strength of the European industrial property markets underlying European CMBS bonds. The results of the study show that between mid-year 2007 and mid-year 2008, the weighted average composite score for the European industrial markets remained relatively stable.
November 3, 2008 - Even those familiar with the Argentine government's taste for theatrical populism were floored when President Cristina Fernandez announced two weeks ago that private pension funds would be nationalized. Denigrating the pension administrators as 'inefficient and ineffective,' Fernandez cast the confiscation as a move to rescue Argentines from an uncertain retirement. The funds, like the rest of the world, have been hit hard by falling asset values.
October 27, 2008 - It's going to take some effort for Mexican nonbank company Metrofinanciera to win back the confidence of the market. Shoddy servicing and poor controls on ABS played a part in steep downgrades from Moody's Investors Service two weeks ago, while deteriorating collateral prompted Fitch Ratings and Standard & Poor's to cut the company's deals ratings in late July and August, respectively.
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