Stormy weather greeted attendees at the Fountainebleau Hotel in Miami Beach as the ABS East conference kicked off Sunday, Oct. 16. Despite this year’s less-than-sunny weather and a drearier economic forecast, conference organizer Information Management Network said attendance reached about 3,000, a 10% uptick from 2010. The tone of Sunday's panels was serious, focusing on digging into deal structures at the loan-level and more transparency around bond pricing.
A bright spot leading up to ABS East has been a robust calendar of new-issue asset-backed securities in September and early October, a factor that has helped bolster expectations for the deal pipeline through year-end.
“There is a degree of stress in our product, but we are not in a bad situation right now, certainly compared to some other areas of fixed-income,” said Brian Wiele, head of ABS syndication at Barclays Capital, speaking ahead of the conference. “ABS as a whole has experienced a good year.”
A big part of the agenda for the next two days was checking in on what’s still on tap through year-end. “People will try to get their arms around expected volumes for the rest of the year,” Wiele said. He expected more U.K. credit card issuance and more U.K. master trust residential mortgage-backed securitizations that target a U.S. investor base, such as the recent Nationwide Building Society’s $3 billion Silverstone Master Issuer 2011-1, which priced Oct. 13.
Jacob Grotta, managing director, structured analytics and valuations at Moody’s Analytics, who presented at Sunday’s Latest Developments in Mortgage Analytics For Investors workshop, said new issuers in the session had plenty of questions about the business. “They were asking about the role of trustees and other basic questions,” he said.
Sunday’s panels were organized in a roundtable discussions meant to facilitate more back-and-forth dialogue, rather than the typical panel-presentation model, with only time at the end for questions.
Grotta said that format helps because the industry is still looking to gain primary market momentum. “If I look at what people spend time and money on—and time is money—it’s on if what they have [in their portfolio] is worth what they think,” he said. “I’d love it to be more about buying new issuance. But we’re not there yet.”
A Midwestern portfolio manager agreed, saying he’d seen some off-the-run deals pulled from the market in recent weeks, given the move toward safer paper. “Skittish investors were not willing to buy into the more opaque structure,” he said, but declined to name the issuer.