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Securitisation to see rise but stay fragile

Standard & Poor’s says there will be more securitisation notes issued in 2011 but warns the market will remain fragile.

Senior director of structures finance research Andrew South, speaking at a seminar at the CML conference last week, said residential mortgage-backed securities would start to recover in the short term.

He said: “We believe that issuance should continue to recover for now. It is fragile and there are regulations coming in which will be potentially negative for it but they have been well publicised and are manageable.”

South said reduced lending volumes in the mortgage market offset a lack of investor appetite for RMBS.

He said: “The investor base is much reduced but we do not expect the securitisation market to return to the same size it was but then most people do not expect lending to reach the same level as it did in 2005/06.”

In September, Royal Bank of Scotland announced plans to launch a £4.7bn RMBS package. Lloyds and Santander both issued a number of smaller deals earlier in the year.

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