It can be difficult to know what to make of all the recent debuts in European securitization.
Indeed, George Smith argued a few weeks ago that the slew of recent and prospective inaugural first-time issuers doesn’t mean the market is functioning perfectly — or that regulatory reform can be forgotten.
Overall, though, it’s certainly something to feel positive about. And Tom Hall struck a more upbeat note in this recent story, highlighting the rise in UK specialist lenders.
Sources suggested there are more debuts to come, including from the continent.
There are various causes for the recent growth in the issuer base, but the most important two are the roll-off of TFSME pushing deposit takers to diversify their funding, and Basel regulations leading banks to scale back, opening the door to specialists.
But the run of debuts is also a testament to just how favourable public market conditions are for issuers at the moment. Enra recently printed the tightest UK buy-to-let deal in three years, also among the tightest such deals since the GFC.
“Look at [Enra’s] Elstree,” another issuer said. “We’re not getting that in the private market. If you want that kind level, you’ve got to go public.”
Going back to the end of last year, Waterfall Asset Management chose a public route for its equity release mortgage deal, Lifetime Mortgage Funding 1. A fund like Waterfall likely chooses whichever route offers the best economics.
Recent years have shown public markets can be fickle, and prudent lenders certainly provision for periods where the market is shut — but right now it’s the best it has been for a while.
Before we forget, George promised links to coverage of Dutch green RMBS in the episode: find them here and here.