Last week the CSC® Global Financial Markets Team spent some quality time in Barcelona for the 23rd annual Global ABS Conference. The three-day event made for a great opportunity to meet with clients and securitisation market participants. Overall, it was a very positive few days, notwithstanding some uncharacteristic rain in the “City of Counts,” which led to a number of hastily reorganised cocktail and networking events.
Fortunately, the weather didn’t dampen the mood and the tone of the conference was cautiously optimistic, with many institutions keen to transact business. Now that we are back in the office, here are some key takeaways we wanted to share:
Fintech activity continues to rise
We met with several new fintech companies and ambitious non-bank lenders while at Global ABS. We learned that while there has been rapid growth in the number of fintechs active in the European credit markets, some of these platforms are quickly developing on a significant scale and level of sophistication, whilst simultaneously evolving their funding model. Judging by the exciting talent joining this movement, we expect to see a flourish of activity in this space in the coming year.
Regulation: good news, bad news
The good news is that for the first time in a number of years, many of our clients were of the viewpoint that there’s no new regulation coming down the pipeline to cause significant worry. The bad news is that the securitisation regulations continue to cause headaches for originators, sponsors, and arrangers, specifically regarding Article 7 transparency disclosures and Article 9 credit-granting criteria.
On Article 7, we observed that while the more established and mainstream issuers have found the pathway from BoE and ECB reporting to the ESMA templates relatively straightforward, there are a number of smaller or specialist issuers undertaking this work for the first time. Across the board, challenges still exist around determining which ESMA templates to apply and points of interpretation for individual field definitions.
New issuances coming
It was encouraging to talk to many U.K. clients motivated to go to market after the uncertainty of Brexit at the start of the year. It is undoubtedly a ride which still has a long way to run, but with completion delayed until 31 October at the earliest, issuers are keen to take advantage of the window of respite. Many of those we spoke to had spent time marketing deals in the U.S. and were broadly optimistic about investor participation in future deals.
Non-performing loans (NPLs) a popular topic
NPLs remain a hot topic and panel sessions on hard asset sales proved popular. There was also a great deal of optimism regarding the growth of NPL securitization, suggesting the asset class should continue to hold its demand.
On a personal note, it was our second year sponsoring Global ABS after the launch of our European business in 2017 and it was brilliant to receive so much support from new and existing clients. In summary, it was a great few days, and we were left with plenty of interesting opportunities and renewed enthusiasm for the year ahead.