ABS

Markets 17th September 2014

Is state backing mezzanine ABS worth it?

MADRID | By Julia Pastor | ECB’s upcoming ABS drive with senior, higher credit quality assets will be launched with or without guarantees from the states, that is for sure. The question is if countries will guarantee riskier tranches, the so-called mezzanine ABS. Spain is willing to do so if others go for it, yet Germany, France and the Netherlands are refusing. This makes sense since a state back up would mean to put assets with uneven exposure to bankruptcy on the same level. An eventual agreement would be a very difficult political decision. Details of the ABS plan will be announced after the central lender’s next monetary policy meeting on Oct. 2.

Spanish economy 15th September 2014

Spain will join countries guaranteeing ECB’s ABS

MADRID | The Corner | As expected, eurozone finance ministers have yet to agree on the guarantees requested by Mario Draghi for the riskier asset-backed securities (ABS), the so-called mezzanine level. Some countries such as Spain have already expressed their intention to guarantee them if some country of the zone euro did. Spanish economy minister pointed out that securitizations in Spain would not be at a comparative disadvantage. For the time being, not Germany nor France or the Netherlands will grant any collateral to the financial sector.

Markets 4th September 2014

ECB will give banks money to spend and punish those who sit on their hands

MADRID | The Corner | Mario Draghi finally unveiled the European Central Bank’s betting on further stimulating the eurozone: benchmark main refinancing rate will be cut from 0.15 per cent to 0.05 per cent and marginal deposit facility risen 0.1 per cent to 0.2 per cent. Also a programme to purchase a “broad portfolio of transparent asset-backed securities” will be in place from October this year. Thus, the ECB becomes the first central bank to announce large-scale asset purchases and negative deposit rates. Reactions were quick: the euro fell below the key threshold of $1.3 to hit a low of $1.2995.

In Europe 3rd September 2014

ECB: We need a QE shot (not 17 of them, JPMorgan)

MADRID | The Corner | It’s speculation day before the European Central Bank’s tomorrow meeting. Will a QE plan finally be announced? Experts at Santander bank think that, if announced too early, it could damage TLTROs. JP Morgan economists believe there is a 30% chance we’ll get a QE shot in 2014, 50% next year. And they’ve come with a proposal we find erratic: 17 different bond buying plans, one for each state member. That is exactly the opposite direction the EU needs to be heading to.

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