In ts capital market press briefing today, KfW Bankengruppe said that the situation in the European securitization markets has “brightened up this year.”
Securitization transactions totaled around €86 billion and were sold to investors. This is compared to the €19 billion in 2009, with the securitizing banks using the instrument primarily for funding purposes.
In 2010, the German-sponsored bank supported securitization deals as an anchor investor with an estimated €1 billion.
British and Dutch RMBS as well as German automobile ABS have been the deals best received by the market. With the successful placement of a securitization of German corporate loans, a positive development has started in this asset class as well, KfW reported.
However, the German-sponsored bank warned that not enough investors have returned to the market, which, they said most likely reflects the continuing lack of trust.
“The securitization industry continues to be called upon to restore confidence in its products,” said Dr. Gunther Braunig, member of the executive board of KfW in charge of capital markets. “It has set an important milestone this year under the TSI by introducing the ‘German Securitization Standard’, which KfW was instrumental in developing. It is a quality label that underscores the solid structures of securitizations ‘Made in Germany.’”
Under the true sale initiative standard (TSI), the deal must be from the banks’ existing portfolio only and must not contain any loans granted on an “originate to distribute” basis.
Resecuritizations are not permitted, and the banks must assume a reasonable risk retention of at least 5% of the transaction.
KfW plans to participate in securitization transactions as an “anchor investor” next year. It will also continue to offer its securitization platforms Promise and Provide.
“We want to fulfill our responsibility as a promotional institution and use all our possibilities to secure a stable supply of credit as the economy recovers,” Braunig said. “Our capital market activities — funding and asset securitization — are also making a substantial contribution to this goal.”