structured finance industry as an integral funding source for the real
economy in the recent discussion paper on European securitisation
prepared jointly by the Bank of
was released on
Securitisation Market, Overcoming the Barriers" and can be accessed via
the link provided at the end of this press release.
The paper concluded that an increase in the issuance of European
securitisation will provide a long-term funding source for small medium
enterprises (SMEs) and consumer borrowing which, in turn, should
stimulate business investment and household consumption and hence
economic growth. SMEs in particular will benefit because of the
difficulty they have in directly accessing the capital markets; they
depend heavily on banks for funding.
market digests the various forces at play, many of which are limiting the
participation of investors and issuers. The market has yet to replace the
exit of a large segment of once-active investors. The anticipated
regulatory cost imposed on remaining large European buyers also
diminishes the economic attractiveness of the structured finance products.
The slowly recovering macro-economic situation across the euro area is
affecting fundamental loan origination. This factor combined with the
continuing balance sheet evolution of many European banks, limits the
volume of underlying assets. Sellers may also be inhibited by regulatory
uncertainty which could increase the cost of issuance.
In a separate report
and the recession affecting many European countries, European
securitisation deals displayed resilience throughout the financial crisis
and performed well, a trend which is set to continue in 2014. None of
the senior notes in EMEA asset-backed securities (ABS) or residential
mortgage-backed securities (RMBS) that
or are expected to incur, principal losses.
The report titled "European ABS and RMBS: Historical Resilience Will
Continue Beyond 2014" is now available on www.moodys.com.
subscribers can access this report via the link provided at the end of
this press release.
EMEA ABS and RMBS notes rated by the rating agency have realised a
principal loss, and only 2% are still likely to incur a loss during their
lifetime. These relatively few incidences exclusively affected
subordinated EMEA ABS/RMBS notes and stemmed primarily from
underperforming collateral or exposure to counterparty risk during the
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