Asset-backed securities issuance in the COVID-19 era: A trustee’s perspective
Asset-backed security (ABS) issuance is picking up steam again, according to the latest figures from SIFMA, a trade association of broker-dealers, investment banks and asset managers. Many lenders I talk with are doing more business than they expected. And lenders’ partners in the securitization industry are sighing with relief. As you reflect on this good news, I’d like to invite a few probing questions that originate from my conversations with colleagues in several corners of the industry.
First, though, let’s take stock of where we are. The SIFMA figures‡ show year-to-date issuance down a third versus 2019—but that’s a drastic improvement over the spring, when issuance fell off a cliff. Student-loan-backed securities have now actually outpaced their year-to-date (YTD) totals last year, and auto loans aren’t far behind. Some of the more esoteric pockets of the ABS market—shipping containers, for example—are actually setting records for new issuance. All this is a positive sign for the lenders generating these loans and their securitization-industry partners packaging, distributing and managing the securitized assets.
So why, then—with these strong positive “bounce back” trends—should anyone pause to do anything more than take a deep breath? Because getting deals done in difficult times is how we learn and improve. What I have observed in recent months is incredibly talented people working incredibly hard. They have had to. And under the high level of stress, these are the kinds of questions that come up:
- What’s making things harder than they should be?
- Do your service providers pick up the phone?
- Can you get a hold of a senior person at the drop of a hat?
- How stable is the team serving you? How experienced?
- With respect to trustees, in particular, do they limit themselves to a gatekeeper role? Or do they actively partner with you to overcome obstacles?
Finally—and perhaps this one most of all—when things are difficult, would you rather be a small fish in a big pond or a big fish in a small pond?
Speaking personally, I can relate that 2020 has been a good year for our team to be in growth mode. When the going gets tough, asset gatherers need the kind of hands-on attention they always deserve. My sense is more people are recognizing that fact—because they’ve been through the wringer and don’t want a repeat of what went poorly.
UMB Institutional Banking combines all our institutionally focused capabilities into one cohesive unit, including ABS and specialty corporate trust solutions. We provide solutions for the entire institutional marketplace from community banks and municipalities, to some of the largest corporations, broker dealers and fund companies in the U.S. Visit umb.com to learn how UMB Institutional Banking can support your organization, or contact us to be connected with a team member.