Securitisation still on the back burner

21 June 2010

Last week I watched Channel 4’s Dispatches programme on how banks appear to have been let off lightly despite the huge injections of cash taxpayers have committed to keeping them afloat.

Frankly, there wasn’t anything in the programme that hasn’t already been debated to death in the past two and a half years but nevertheless there was a small gasp from the presenter when he revealed that bailed-out banks aren’t lending much money.

The next day I went to the Global Asset Backed Securities Conference that in previous times has been held in destinations ranging from Barcelona to Cannes, but for the past two years has taken place in sunny Paddington.

There must have been about 4,000 professionals in attendance, pretty much all of whom had some interest in the securitisation sector.

Unfortunately, what I took from the conference is that there are still no obvious signs of a return to a functional market.

As I have said before, until securitisation comes back or some other form of funding replaces it there’s no chance of big banks regaining an appetite for lending.

There were also rumours that the first non-conforming securitisation deal since the collapse of Lehman Brothers may be postponed or scrapped due to lack of take-up, despite the unbelievable level of credit enhancement put into it.

It’s time for the government to do something to restore confidence in the securitisation market.

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