Securitisation market shows first signs of life

Tuesday, October 23, 2007

The European securitization marketplace has emerged with the news that a residential mortgage-backed securitization has had all its notes publicly offered.

This is understood to be the first such deal since the credit crisis took hold of the global markets in August.

This is good news for the market which is beginning to show slow signs of recovery. It has also emerged today that Lehman Brothers is believed to be preparing a new €1bn commercial-mortgage backed securitization.

Commentators have suggested that it will take until the second half of next year before the securitization market returns to the UK market but with signs of life emerging across Europe, the UK mortgage market is likely to be buoyed by the news.

The deal is expected to be made up of prime mortgages. It is interesting that everything is happening in the European market, stating that it might be a by-product of the ECB having pumped a lot of money into the market.

Once the market sorts out a price for the prime market then it will make it easier to establish a price for the secondary market.

This is good news as there now seems to be genuine confidence starting to emerge.