2/23/2026
Anything you can do, I can do better goes the saying. And it looks to be the PRA’s mantra when it comes to European securitization reforms.
Barely a week after the EU Parliament’s latest amendments to EU SecReg, the UK’s PRA announced its latest batch of proposals to reinvigorate the sector. The big focus was on moving away from the EU’s more prescriptive style of regulating, towards a more principles-based approach, which is in keeping with the UK’s historical style.
Alongside it was also a clear desire to reduce the onerous demands on investors from a compliance and operational point of view, which the PRA suggests could save firms around £3m in costs.
This wasn’t pruning, this was a good old fashioned chop to the red tape that many market participants have lamented for years.
The proposals are split into five main categories of reform; major simplification of due diligence, the introduction “L-Shaped” risk retention, transparency & reporting reforms, targeted reintroduction of resecuritization, and new capital treatment for mortgage guarantee scheme loans.
Unlike the EU’s latest document, this is quite easy to read rather than chuck through AI. You can do so here. AI chucking is optional.
I won’t go through all the points, but on simplifying due diligence requirements, there is some serious slashing going on. Mandatory verification of credit-granting and risk retention compliance, mandatory STS verification, prescriptive due diligence checklists, mandatory stress testing requirements, and written monitoring procedure requirements – all of it is gone. And the PRA thinks it could save between £1.6m-£3.3m in operational costs.
In addition it should make it easier for UK investors to participate in non-UK trades. They explicitly mentioned US CLOs, so watch out for that.
Meanwhile on transparency and reporting reform, the proposals include removing numerous prescriptive disclosure templates, removing the need for mandatory reporting to securitization repositories, and eliminating the distinction between public and private deals. This is said to lead to further savings of around £2.2m for originators and sponsors.
It does remind me of a “Round Table” report I did back in my journalism days where an investor present said that one of the key problems with the regulations in the EU/UK was that the rules were set up so that “no one could ever lose money”.
The problem was the cumulative effect. It meant sophisticated investors were treated as if regulatory compliance could substitute for judgement.
Investing, by definition, involves risk. And so the policy objective should be transparency, alignment and capital resilience, not the elimination of loss.
Now, the PRA’s direction of travel suggests they’ve listened. They’re looking at maintaining prudential guardrails, but stepping back from micromanaging how investors conduct their analysis.
As a quick aside, I should say that my expectation is there will be more proposals coming. Reducing compliance costs is one thing, but so often, the market comes back to the simple capital requirements. And if they are too punitive then many investors simply won’t bother playing.
For now, we must hold our breath.
As for deal flow, it’s been a somewhat calmer couple of weeks in European ABS. Euro trades got into a good groove by the end of January with some astonishing prints from the likes of BBVA. But with no competing forces in the market, Hyundai’s €600m Pony German Auto Loans 2026-1 was able to strut its stuff in what we can confidently say is a seller’s market.
The top A2 tranche was partially pre-placed, allowing the marketed A1 to show strong multiples early. That visual momentum helped justify two meaningful tightening rounds without denting demand elasticity. Meanwhile, mezz and junior buyers demonstrated serious appetite, 5–6x coverage in AA/A territory is not a hesitant bid.
The result confirms that the early-2026 tightening trend is not isolated. When IPTs leave a little air, the market is currently happy to squeeze it out.
For Hyundai, this reinforces Pony as a scalable funding tool. For the broader market, it’s another datapoint showing that Euro auto supply is being absorbed cleanly and at increasingly assertive levels.
In sterling, there were two trades, a Single-Use CMBS from Blackstone in what was not a fully public process.
And finally, the market went to Slough, birthplace of Ricky Gervais’ The Office, and long-standing proof that corporate progress doesn’t always guarantee architectural beauty, to announce the arrival of a new data-centre issuer, Yondr Group.
The £532m deal, Yondr UK 2026-1, is a single fixed-rate tranche. And it would hardly be a surprise if that structure once again proves convenient for US investors. And if AI is going to take over the world, it might as well start on the Slough Trading Estate.
Spring is surely near because babies seem to be popping out of my friends and family at an alarming rate in recent weeks.
Indeed, as I type I’m moments away from becoming an uncle. Uncle Tom has a good ring to it I think... Might have to rename the newsletter.
Meanwhile, my weekend was spent painting the living room. We’ve gone for green. A sort of dark earthy green. I think it looks good but it’s not exactly a relaxing way to spend a weekend. Oh and if anyone knows how to attach a TV to a wall without making it wonky, hit me up.
Have a great week
Tom
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