After playing defense in 2022, investors appear to be willing to deploy capital even as the MBS and ABS markets face numerous headwinds. Attendance at this week’s SFVegas conference hit a record level.
Investors are pleased that FHFA has improved the capital treatment of commingled securities. The overall industry response to the proposed rule change, though, has been a resounding “meh.”
Prime jumbos are unlikely to account for the majority of non-agency MBS issued this year, a first for the products since the time before the financial crisis. Non-QM MBS issuance is holding up better and second-lien securitizations are building some momentum.
Finally, prices are starting to seem (somewhat) reasonable for non-agency whole loans of the non-QM variety. But this applies to recently originated product — where supply is lacking.
S&P Global Ratings said that the advantages of decentralized finance securitizations, including increased transaction speeds and greater transparency, are counterbalanced by several risks in the sector. Many of the risks are inherent to the use of a blockchain, like difficulty correcting errors in registered information.
Global conflicts top of mind at SFVegas; ESG and credit risk; no housing-finance reform expected when the sun’s out; Ginnie looking to fill COO position; American Car Center’s subprime ABS under review.
Freddie Mac saw a big fourth-quarter increase in Supers issuance that appeared to make up for lost ground earlier in the year. All three agencies posted declines in new REMIC production in the fourth quarter. (Includes two data charts.)
AB CarVal Investors and Ares Management are in the market with separate expanded-credit MBS, marking the first time either firm has offered that type of MBS.
The 60-day-plus delinquency rate on subprime auto ABS hit a record in December. Performance is expected to decline this year and non-investment-grade ratings could face downgrades.
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