Europe’s Securitization Sales Lowest in Five Years

Europe’s securitization market has experienced its worst quarter in nearly five years for new sales, according to a recent Financial Times article. During the first three months of this year, €14.3 ($16.4) billion of securitizations were sold, marking the lowest quarterly level since mid-2011 despite recent efforts by the European Central Bank to revive the sector.

According to the Financial Times, market participants have pointed to stringent regulation on the sector, in particular the capital charges against structured products for banks and insurance companies, as a central factor in its decline.

“The rulemakers work on a different time horizon than the markets,” said Alexander Batchvarov, Head of International Structured Credit Research at Bank of America Merrill Lynch. “We’re getting into a negative spiral,” he added. “There is a collapse in secondary liquidity, a collapse in inventory, more and more structurers exiting the market. Who is going to do anything?”

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