Chillin' out till it needs to be funded
Seemingly not much of structured finance tranches adding investments and or redeeming this year have options outside the sector as European defaults of structured ABS remain all time lows providing hege funds a good income opportunity in a bleak envisromnment. New ABS issues, however unlikely they may seem, as they depend on new mortgages, are increasingly taking the 144 A route ( Private Placements with qualified institutions) Structured Finance already account for more than 20% of the collateral in the US markets, reaching a stage where caution is likely to be exercised.
According to the Reuters report, 70% of Structured Finance securities have bettered ratings over the previous period and defaults have been limited to 1% of the outstanding in Europe, consumer tranches ( retail) havng outperformed at 0.04% vs 3% for commercial tranches yet. AAA issuance has been privileged and yet over 54% have been redeeemed and ratings withdrawn.the 1% default highlighted by S&P in its latest report means that EUR 26.0 bln of the EUR 2596 bln in issue has defaulted since 2007
S&P had first highlighted the strains in the Structured Finance market and the resulting lack of liquidity even as large scale redemptions were calendarised in September/October 2011