6/16/2025
No matter how many times I go to Barcelona, it seems I never learn. Every year, I’m so excited to go, like I’m heading off to Glastonbury. And then by Wednesday night, like clockwork, I’m shattered.
But it’s the internal surprise that gets me. ‘You’ve done this five times now,’ I tell my slow to learn self.
Nevertheless, it’s still great fun. So much fun in fact, that no deals were priced or even began marketing.
I’m tempted to say that I’m sure deal flow will begin in earnest soon enough this week, but the market has returned home to a more dangerous geopolitical environment. The conflict between Iran and Israel began on Friday and fighting has continued into Monday.
It’s not my place to say anything more on huge geopolitical events, of course. Rather, I should put it in the context of structured finance and the Global ABS conference.
Undoubtedly, this evolving situation will be a big topic of conversation, but as a friend said to me today, it’s currently in the worry column rather than the impact column. Yet these things change so quickly, the situation is so volatile, that we really have no idea what could happen next.
For now, broader markets have not reacted, nor has European ABS. Indeed, Nationwide decided to remarket its latest Prime RMBS from the Silverstone shelf this morning.
But what of the conference itself? Sentiment appeared to be a mixture of varying degrees of optimism.
That is apart from the headline speaker this year, Ben Wallace, former Conservative MP and Defence Secretary for the UK Government. This is a man with first-hand experience of Europe’s response to the war in Ukraine, the broader threat of Russia, conflicts in the Middle East, and the question of China.
Wallace’s Q&A was filled with warnings. The world would be “less stable, less secure and more anxious,” he said.
He was worried about the future of NATO and he spoke about how in the modern era of cyber warfare, aggressor nation states could hack practically any company in the world if they wanted to, and no amount of security could stop it.
The scenes of destruction in Iran and Israel show he is right to cast such an anxious tone over global affairs.
However, aside from Wallace, conference sentiment was nervously optimistic. The nervousness clearly comes from the fact that you cannot control what happens in global conflicts and other macro-noise. What makes this more difficult is that you can’t really price any of that in, as one panelist said.
But the optimism, as another panelist said, comes from “mad” technicals driving spreads tighter. There’s so much capital to deploy in ABS at the moment, as the world has seemingly woken up to the value of floating rate products.
This is reflected in strong year-to-date issuance, despite the late March blip. Placed issuance is at €54bn, according to Concept ABS, which is still roughly in line with the bumper year of 2024. FY2024 finished on just over €100bn, so anywhere around that full year figure for 2025 should be seen as a strong result.
For context, FY2023 issuance was just €66bn, while the first six months of 2023 had barely passed €30bn. Clearly, 2025 is doing alright so far.
The other hot topic last week was regulation. With the European Commission’s proposals leaked a couple of weeks ago, and due to be released this week (most likely on Tuesday), there is a mixture of hope and frustration.
I wrote about it extensively a couple of weeks ago (here). But there is still a lack of consensus about whether the leaked proposals should be seen as a good development or the beginning of a reform package that flatters to deceive.
I think all participants would broadly say that if enacted, the current proposals would represent a step forward. Whether it’s a big enough step to fully revitalize the market is the bigger question.
There are also elements around Solvency II and the LCR (liquidity coverage ratio) that remain unknown. Although one tidbit I can offer is during the panel “Institutional Investor Perspectives”, Fausto Parente, Executive Director at EIOPA, the EU’s insurance regulator said he didn’t believe the EU would “listen” to EIOPA on many of its concerns around Solvency II reforms.
One positive that numerous panelists mentioned over the week was that the reforms are being considered as a package, not a series of measures which policymakers could just pick and choose from.
It’s long been argued that the world of securitization is complex, as are the reasons for its stagnation. So, changing one element or just a few doesn’t solve the problem if all issues are not tackled together.
Overall, it’s clear further changes and clarifications are wanted by the industry. One person said to me that it’s about 80% there, with a lot of really big issues being dealt with well.
We’ll have to wait and see what more comes out this week and beyond.
Unfortunately, I must admit that I didn’t have loads of time to judge the swag on offer at Global ABS this year as I did over the past few years in my GlobalCapital days. Although, I understand that my old colleagues have kept up that tradition!
Instead, I mainly bought stuff that my dog, Chewie, would destroy. So, thank you to Apex Group, Euronext (x2), and Walkers.
Here he is enjoying them all, alongside my Freshly Squeezed cap – this is merch that has not yet been released to the ABS market. As of yet, he has not managed to rip the heads off any Teddies or Iguanas.
Have a great week back!
Tom
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