Talking Point

  • Sound and fury

    Tales told, but little signified

    Much has already been written about the appearance of "Goldman Sachs" before the "Senate" in the 18 hours since it actually happened. There may be little to actually come from this very public event, but there were at least a few stand-out moments in the day's seemingly endless proceedings.

    While most of the mainstream press had been heralding yesterday's appearance .......

    Talking Point 28 April 2010

  • Transition trends

    Andrew South, senior director at S&P, notes that mar...

    In 2009 the severe economic recession and the ongoing rationing of credit to both corporate and household borrowers continued to place significant downward pressure on European structured finance ratings in some sectors. In addition, evolution in S&P's methodologies also caused some ratings migration. However, despite the extremes of the current economic and capital market environment, the effect of these developments .......

    Talking Point 17 March 2010

  • Washington heights

    Regulation, RMBS dominate ASF discussions

    The location, in Washington DC, of last week's American Securitization Forum (ASF) conference was aimed at bringing the industry closer to the US regulators. Indeed, much of the resulting discussion focused on regulation - in particular the proposed retention requirements - as well as how to kick-start the private label RMBS market.

    Hal Scott, Nomura Professor and director, programme on .......

    Talking Point 10 February 2010

  • New valuation challenges

    Andrew Smith, founder and president, and Bruce Lohman, md at...

    In December 2009, the Fed reiterated its anticipated expiration dates of the Term Asset-Backed Loan Facility (TALF): June 30 of this year for loans backed by new-issue CMBS and March 31 for loans backed by all other approved types of collateral. The original anticipated date having been 31 December 2009, there is certainly no guarantee that the new dates won't .......

    Talking Point 27 January 2010

  • Going it alone

    The time for government intervention in Euro ABS 'has passed'

    The need for government intervention in the European ABS market has passed, according to panellists at a Fitch-hosted conference in London this week. Improving investor appetite, increasing confidence in the performance of existing European transactions and the re-emergence of a primary market were listed as positives for the sector.

    "There was a time and a place for government intervention in .......

    Talking Point 20 January 2010

  • Evaluating credit ratings in structured finance

    Simon Collingridge, md, structured finance, at S&P e...

    At the start of the global financial crisis, credit deterioration was generally limited to certain US structured finance assets and global financial institutions. However, the onset of a broader economic recession has meant rising credit risk across most financial asset classes - for example, European residential and commercial mortgages, consumer finance and corporate credit. In certain cases, this deterioration has .......

    Talking Point 13 January 2010

  • Pricing at the point of revaluation

    Chris Zingo, evp sales and support, Americas at SuperDerivat...

    We are living in a period of unintended consequences. The effort to expand home ownership has contributed to one of the largest economic collapses in market history, while the traditional Wall Street model of distributing risk - "Sell it to the other guy" - was proven to be unsustainable.

    The effort to ease interest rates and create liquidity has contributed .......

    Talking Point 28 October 2009

  • Primary revival?

    Japan leads Asia-Pacific ABS recovery

    Eight Japanese ABS transactions were completed towards the end of September, making it one of the few Asia-Pacific countries where primary ABS and RMBS issuance is continuing. However, there are signs that investor appetite is now beginning to improve in other Asian financial centres.

    Here, SCI talks to Moody's analysts about existing and potential securitisation activity across the region.

    Activity .......

    Talking Point 7 October 2009

  • An alternative universe

    Edward Torres, president Baldwin & Lyons Capital Mar...

    Given the challenges facing investment managers today, it is not surprising that many are casting a wider net in search of attractive yields and less volatility. One option, which has received a lot of attention recently, is insurance-linked securities (ILS).

    While much has been written about the diversification benefits of this emerging asset class, the last 12 months seem to .......

    Talking Point 29 July 2009

  • Global ambition

    ABS community gathers in London

    The IMN-ESF Global ABS conference was held on London's Edgware Road this week - a far cry from the Palais des Festivals et des Congrès in Cannes last year, but perhaps a more fitting location given the more realistic tone pervading this year's panels. Gone is the "cautious optimism" that was bandied around in 2008; in its place a realisation .......

    Talking Point 3 June 2009

  • The intelligent corporate services provider

    Katherine Saville-Barwood, senior transaction manager at TMF...

    Traditionally, special purpose vehicles (SPVs) established for structured finance transactions and the corporate services providers who maintain them have adhered to the mantra of being seen but not heard. However, the momentous market events of the past twelve months have altered the financial landscape immeasurably and issuers are now being called to the table and asked to speak up.

    Securitisation .......

    Talking Point 15 April 2009

  • Better economic paradigms

    Stefan Wasilewski, ceo Contingent Capital Corporation, discu...

    Reprise
    In two previous articles (see SCI issues 118 and 125) I suggested that Alan Greenspan was not at fault for making a mistake, but that the world had moved on without informing him of fundamental changes in the manner and content of modern reporting processes - especially with regard to their use in risk assessment. I think we should now .......

    Talking Point 25 March 2009

  • Call for clarity

    Distressed timing and tactics discussed

    The need for increased clarity around government intervention in the market was the main message from attendees at IMN's European Distressed Credit Investing Summit last week. However, plenty of advice was also on offer in terms of timing and tactics with respect to the distressed opportunity.

    "There continues to be uncertainty around how government intervention will play out, which isn't .......

    Talking Point 18 March 2009

  • Recursive boundaries in finance

    Stefan Wasilewski, ceo of Contingent Capital Corporation, di...

    Reprise
    Back to Alan Greenspan (see SCI issue 118): in my opinion, he wasn't at fault, just deceived. Not by anyone in particular, but by his own paradigm of thinking. Though I believe his accumulated wisdom with regard to the global economy and the US banking system is great, his own paradigm of control relates to a generation ago.

    It appears .......

    Talking Point 25 February 2009

  • Derivatives are a zero-sum game: true or false?

    Anu Munshi, partner at B&B Structured Finance, expla...

    Derivatives are bilateral contracts, so one party's loss is equal to its counterparty's gain and therefore the transaction as a whole is a zero-sum game. Right? Well, if that's true, then why has almost everyone who has traded derivatives lost money over the last year?

    It's because derivatives are only a part of any market. We need to look at .......

    Talking Point 4 February 2009

  • F# - towards a sustainable benchmarking of investment risk

    Stefan Wasilewski, ceo of Contingent Capital Corporation, ai...

    "I made a mistake": Alan Greenspan (Financial Times: Alan Beattie and James Politi, Washington, 23 October 2008). Such are the words of great men, for even in troubled times their self-effacing manner proves useful guidance. While Greenspan may feel this way, he is a product of his environment - one that has seen the cumulative development of financial instruments and .......

    Talking Point 7 January 2009

  • Looking ahead to the 19th century to capitalise on an historic market opportunity

    Mark Cernicky, product development manager at Aviva Investor...

    As we enter 2009, let's look ahead and stop asking who or what should take the blame for the current economic mess: sub-prime, credit derivatives, "quants" or even Alan Greenspan's low interest rate policy which inflated housing prices.

    As a result of the application of leverage to poor credit underwriting, investors today have an historic opportunity to earn attractive and .......

    Talking Point 17 December 2008

  • Recovering losses

    Anthony Riem, partner at PCB Litigation, explores how hedge...

    The multi-jurisdictional nature of many hedge funds, their investors and the companies in which they invest can make any associated litigation a daunting prospect. Nonetheless, in the current financial climate parties involved in or with hedge funds are increasingly looking to litigate in order to recoup funds lost to negligence, fraud or simply a falling market.

    A startling example of .......

    Talking Point 5 November 2008

  • New CLO paradigm

    Structures and complexity to suit remaining investor base

    European CLOs are experiencing a shift in structure and complexity in order to meet the demand of investors who are still able to part with cash for the asset class. While industry experts at this week's ESF/IMN conference on 'European CLOs, Structured Credit Products & Credit Derivatives' said that demand for CLOs remains, less leveraged, simpler two-tranche structures are expected .......

    Talking Point 8 October 2008

  • Weighing up CDO tranches using Omega functions

    The application of the Omega function to structured credit i...

    Investing in structured credit products, especially collateralised debt obligation (CDO) tranches, can be an extremely challenging endeavour given the degree of complexities in their risk profile. CDO investments have highly skewed return distributions: either you'll get paid the promised rate, or the debt will default and you'll take a loss (this is termed negative skew).

    Rational investors detest large losses .......

    Talking Point 9 July 2008

  • The Cannes report

    Cautious optimism for recovery, but rating agencies to take a back seat

    Attendees at the Global ABS conference in Cannes this week were cautiously optimistic about the future of the structured credit sector. The majority agreed that a critical point had been reached and a recovery would be subject to confidence being restored in the market and rating agencies, alongside more detailed and accessible data for deals.

    "What this crisis has shown .......

    Talking Point 4 June 2008

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