The reports are a blow to those lenders who rely on the money markets for funding as they would have hoped to see the securitisation market returning to strength as soon as possible.
With the full extent of banks’ non-conforming debts still to be calculated, confidence is set to remain low for the foreseeable future.
Bob Sturges, director of communications at Money Partners, commented: “The first step is to identify each institution’s exposure. Only then will the market get the confidence to move on. There are varying estimates as to when you’ll see the market come back; the soonest being six months and the longest three years. I think three years is too pessimistic and six months too optimistic, but you will see a return in 2008.”
Tony Capon, head of intermediary sales at Salt, echoed Sturges’ view and insisted that the market was already showing fundamental shifts.
“I was talking to people at Lehmans and they don’t seem to think there will be much of a return until well into next year. However, purchasers are now being prescriptive in what they want, so you will see product lines out there which have been put out to order, instead of just chucking out mortgages and investment banks soaking them up.”
On a more positive note, the first UK securitisation, using prime buy-to-let and self-certification loans, has been given its final ratings by the rating agencies.
The products, originated by Alliance & Leicester and sold by Lehman Brothers, are priced at 40 basis points above the London Interbank Offered Rate, with the portfolio containing £205 million worth of AAA bonds and a small amount of AA, A and BBB bonds making up the £231 million total.
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