Editor's Letter


As July came to a close, it was clear to everyone at ASR that the structured finance market was not about to take a vacation.

Deals, drama, and the unceasing drumbeat of regulations kept us as busy as we normally are at other times of the year.

But we didn’t let the news deter us from looking ahead.

Indeed, this month’s cover story by John Hintze explores how insurers may be coming back to securitization to fund what they see as excessive reserve requirements for certain life policies. The idea is to free up capital. There are questions about investors’ appetite for a generally low-yielding instrument, but players think some sort of revival could take place, after nearly three years of no deals.

Also with a forward bent is how Basel III rules will play out in securitization markets. In Felipe Ossa’s piece, a prediction by Barclays is that Re-REMICs stand to benefit, while asset-backed commercial paper sponsors have introduce new instruments in order to steel themselves from the effects of a potentially punitive liquidity coverage ratio.

This month ratings agencies are the protagonists as well as antagonists of a few stories. Nicole Carlson reports that container lease deals are enjoying ever higher ratings as agencies no longer see such a tight link to sponsors; Karen Sibayan explores the friction between Standard & Poor’s and proponents of covenant-lite CLOs; and in our market wrap for June, we revisit sparring among the rating agencies over the risks in RMBS with heavy geographic concentration.

We’ve got two experts talking about housing finance reform as well. A former PIMCO exec, Scott Simon, argues that government guarantee on RMBS is something we should embrace, not reject. Our other pundit, Alex J. Pollock, a fellow at the American Enterprise Institute, disagrees.