AFME and IMN hosted the 23rd annual Global ABS conference in Barcelona last week. Over 3,000 private investors, issuers, regulators, analysts and service providers gathered for one of the largest conferences for the European structured finance community. Read on for key takeaways from the Intertrust team and insights from our own audience poll.
The demise of Libor
A wide range of topics were covered, in particular the imminent demise of LIBOR and the transition to a replacement as well as EU regulatory challenges and compliance with the Simple, Transparent and Standardised (STS) framework. You could have been forgiven for expecting a rather pessimistic conference due to the various challenges posed by these changes but on the contrary, even during the torrential Barcelona rain of Tuesday (who says it never rains in Barcelona in June?), the atmosphere was very upbeat and confident. Most attendees agreed that issuers and investors are now becoming comfortable with STS and that SONIA is an acceptable replacement for LIBOR.
Securitisation Regulation is the new reality
The Securitisation Regulation became effective as per 1 Jan 2019, although not fully adopted yet by the European Parliament, which is, according to some market participants, not expected before Q1 2020.
In Q2 2019 ABS issuance seem to have picked up significantly compared to Q1 2019 with a lot of transactions still in the pipeline. Despite the unofficial status to date, originators generally seem to be obtaining STS certification where possible as evidenced by a number of transactions disclosed on the ESMA website. Furthermore, a significant number of deals are currently in the pipeline of STS verification according to one of the appointed verification agents.
In a broader context, although securitisation is still not favourable compared to covered bond transactions given the economics, the general sentiment seems to be more positive compared to previous years, which is hopeful for issuance volumes in HY2 2019 and 2020. Pending more (technical) guidance and final adoption of the Regulation, originators and investors are still struggling to meet all requirements imposed by the Regulation, specifically in terms of due diligence and transparency. A lot of market participants are working hard to assist originators with this journey.
First adopters like Volkswagen and Obvion have attempted to pave the way, which is well appreciated and there seems to be a common agreement that the “STS train” has departed and it would ultimately be beneficial to the market to all jump on, rather than stay behind at the station.
Diversity and Inclusion
This year was the first year in history at Global ABS that all panels contained a gender mix; one panel in particular, explored how the ABS market scores on equal opportunity to career development, role models and inherent obstacles to promotion.
There are no statistics available for the ABS market, but if the wider market is anything to go by, the financial industry averages just below 20% for the female workforce; the percentage diminishes the more senior the role is.
At Intertrust: 50% of our workforce is female – 30% of our managers are women – 30% of our MDs are women. Our CEO is a woman. Our Chairman is a Chairwoman.
Next year – the conference organiser, IMN has been challenged to collect diversity statistics from the sponsors, and to encourage attendance of young rising stars, especially in tech and sustainability space.
The use and benefits of “new” technologies, such as blockchain, artificial intelligence, robotics and automation were repeatedly pointed out throughout the conference. All of these technologies will lead to greater transparency and standardization. At the same time, these technologies will have a significant impact on the cost, efficiency, speed, and security of products and services, including corporate services. One example cited was the placement of a promissory note loan via blockchain technology (LBBW/Daimler) in February 2019.
Various panels indicated market movements as well as the necessity to deal with the latest technological developments, to use them in the best possible way and in the interest of all participants, to find new solutions and possibly also to take a look for new co-operation in order to increase one’s own efficiency.
Questions for the Global ABS community
Intertrust posted a series of questions on our interactive poll for contacts we spoke to throughout the conference. Find out below how the Global ABS audience voted.
Dublin favoured for SPV location
A bit of bias may have shown through, however, Dublin walked away a clear winner with 30% of the vote, with Luxembourg and London just behind at 20%.
Taxation has the greatest impact on securitisation activity
Similarly, poll participants were torn but voted taxation as most likely to impact securitisation activity.