Much of the recent funding of new entrants into the non-conforming market has been provided by US companies, while a number of securitisation deals have involved American investment banks.
However, with many of these firms forced to confront spiralling delinquencies and bad loans back home, many believe this will blunt their appetites for UK tranches.
Mark Sismey-Durrant, chief executive of Heritable Bank, commented: “The US investment banks have a history of not staying the course if things go wrong and if their nerves go and their sentiment disappears, they might think UK securitisations are not worth the risk. The logic says the UK market is okay, but it is often not logic which dictates in these circumstances but sentiment. If investors get uncomfortable, the pricing will go up and this will have an effect on competitiveness.”
This belief was echoed by Linda Will, managing director of Accord, who also believed the rating agencies may impact on American banks.
She explained: “Many US banks have significant exposure in both the US and UK so the American situation could blunt their appetite for loans. They also rely on AAA ratings so while they may argue they are two different markets, you may see the rating agencies downgrade them.”
However, Bob Sturges, director of communications at Money Partners, pointed out: “Lenders with operations over here but have central command structures must be seeing some serious nervousness and there must be people in the US who will be worried about the operations elsewhere. However, these are very smart people who run these investment banks and they know the two markets are different.”
