OREANDA-NEWS.  Fitch Ratings attended the annual Global ABS conference in Barcelona from 16-18 June, with a combination of presentations and panel discussions. Below are some highlights from the key presentations and panel discussions.

Euan Gatfield, Managing Director, EMEA CMBS: "We have observed a raft of improvements in CMBS 2.0 note structures since the market reopened, although this has fallen short of the goal of standardisation. Ambiguity surrounding principal allocation rules has been resolved, while the interests of various stakeholders, be they the controlling class or class X investor, have been better aligned with the senior note holders.

While loan terms and leverage levels have also improved compared to legacy deals, property collateral quality remains challenging, and is by no means limited to prime real estate, but increasingly covers a range of use-types and non-core submarkets."

Gregg Kohansky, Managing Director, EMEA RMBS: "Previously, transactions backed by prime assets dominated the landscape, but recently there has been a higher proportion of relatively non-standard transactions - specifically purchased portfolios and originations from new lenders.

Market dynamics are partly driving these changes. Given the high margins on underlying assets which were typically originated before the crisis, and the relatively low note spread levels, we are not surprised to see a number of transaction sponsors now looking to purchase portfolios to securitise."

"Matthias Neugebauer, Managing Director, EMEA Structured Credit: "Securitisation can be an appropriate technique to finance the small and medium sized enterprise sector, however, it remains uneconomic to do so. The combination of low spreads on the SME loans, high credit protection in the CLO structure and relatively high spreads on the SME CLO notes do not make for a compelling combination for the arranging banks. In addition, banks have cheaper funding alternatives available to them which makes securitisation uncompetitive.

This contrasts with SME CLOs with SME leasing transactions. Leasing firms do not benefit from cheap funding as banks currently do and therefore securitisation is a more attractive funding option for them."