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| Grand: backed by good-quality housing |
In June, a recurring topic of conversation at the Barcelona Global ABS conference was the drying up of CMBS issuance in Europe. Analysts warned that issuance was significantly down on 2005 in the first half of 2006 and would struggle to match 2005’s total. The unthinkable prospect of this asset class (the red hot story of 2005) stalling, perhaps because of increasing competition from the lending market, was rearing its ugly head.
One month and €10 billion later, things couldn’t be more different. Sometimes you should be careful what you wish for – the worry now is that the deluge of paper that hit the market in July will swamp demand and push spreads wider. The volumes bear testament to the time and resources that many European banks have devoted to building their CMBS conduit franchises over the past couple of years: in July conduit deals were launched by Deutsche Bank (Deco), ABN Amro (Talisman), Citigroup (EMC), Credit Suisse (Titan) and EuroHypo (Opera). There was also a second securitization from London & Regional (LoRDS). Most remarkable, though, was a €5.5 billion deal (German Residential Asset Note Distributor) from Terra Firma Capital Partners which – although widely anticipated – caught the market slightly off guard because of its sheer size.
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