Commercial bank and savings institution holdings of non-agency ABS fell again during the third quarter of 2016, marking the 11th consecutive quarterly decline in the industry’s investment in the sector, a new Inside MBS & ABS analysis of call-report data reveals. Banks and thrifts held $128.55 billion of ABS on their balance sheets at the end of September, down 1.9 percent from the previous quarter. The industry’s aggregate ABS portfolio was off 8.8 percent from the same point in 2015. The ABS market itself shrank...[Includes two data tables]

Investors are trying to make sense of the new political/economic landscape following the election of Donald Trump to be the next president, and how best to navigate his uncertain, and at times contradictory, signals during his campaign. Much of the conversation over the last week has focused on the likely effect the new regime will have on the Federal Reserve and its chair, Janet Yellen. Trump, who has been a fierce critic of the U.S. central bank, has indicated he won’t outright replace Yellen, but neither will he nominate her for a second term. And of course, what happens with the Fed will spill over, one way or the other, into the financial markets. “The Fed will normalize...

An affiliate of Verizon Communications will issue a $1.40 billion ABS backed by payment plans for cell phones, according to presale reports. It’s the second transaction of its kind from Verizon, with industry analysts projecting that issuance could increase due to widespread financing for cell phones and investor demands. Verizon Owner Trust 2016-2 received preliminary AAA ratings from Fitch Ratings and S&P Global Ratings. It’s larger than the $1.17 billion ABS Verizon issued in July and the senior tranche on the pending issuance includes slightly less credit enhancement, indicating increased comfort among rating services. The July issuance included...

Freddie Mac and Shellpoint Partners are preparing to price new securities in the aftermath of the presidential election, and Select Portfolio Servicing priced $600.0 million in an MBS backed by servicer advance receivables this week. Freddie is about to issue a Whole Loan Securities transaction, which would mark the second such issuance from the government-sponsored enterprise this year and the fourth overall, dating back to the first WLS transaction that closed in July 2015. The balance of the planned Whole Loan Securities Trust, Series 2016-SC02, is...

New regulations from the Treasury Department and IRS regarding “earnings stripping” tax-avoidance schemes by multi-national companies will apply to ABS in certain circumstances, causing problems for issuers and investors, according to industry analysts. The regulations aim to reduce the benefits of corporate tax inversions and earnings stripping by distinguishing debt from equity. “Earnings stripping can reduce a company’s tax bill by generating large interest deductions when that company simply increases its debt to an affiliated foreign firm, without financing new investment in the U.S.,” Treasury Secretary Jacob Lew said when announcing the new regulations in October. The regulations generally apply...

Issuance of non-mortgage ABS increased by 25.5 percent from the second quarter of 2016 to the third, thanks to significant increases in several asset categories, according to a new Inside MBS & ABS analysis and ranking. The market produced $54.05 billion of non-mortgage ABS during the third quarter, the highest output since the second quarter of last year. Despite the gain, year-to-date issuance remained 1.9 percent below the level notched in the first nine months of 2015. A lot of the increase came...[Includes two data tables]

The Structured Finance Industry Group is preparing to publish standards that aim to increase transparency for representations and warranties on new non-agency MBS, according to officials at the trade group. Eric Kaplan, a managing partner at Ranieri Strategies, said SFIG will release one or two “green papers” this year as part of the group’s RMBS 3.0 effort to revive issuance of non-agency MBS. Kaplan detailed the plans along with Daniel Goodwin, director of mortgage policy at SFIG, at the recent ABS East conference produced by Information Management Network. SFIG has released...

Affiliates of New Residential Investment this week issued a $345.0 million ABS backed by excess spread from mortgage servicing rights on non-agency mortgages. The deal appears to be the first of its kind to receive a credit rating. Morningstar Credit Ratings assigned a BBB rating to NRZ Excess Spread-Collateralized Notes 2016-PLS2. With MSRs, excess spread consists...

Issuance of new residential MBS and non-mortgage ABS rose sharply in the third quarter of 2016, according to a new Inside MBS & ABS analysis. The market produced a total of $494.11 billion in new MBS and ABS during the third quarter, a 25.0 percent increase from the second quarter. That brought year-to-date production to $1.208 trillion, slightly ahead of the pace set during the same period in 2015. It was...[Includes one data table]

A boom in ABS backed by unsecured consumer loans requires closer scrutiny, according to analysts at Fitch Ratings. Marketplace lenders have boosted the issuance of such ABS in recent years, though the rating service warned that deal performance is difficult to predict. “Many firms in this space have legitimate value propositions and apparent technological advantages,” Fitch said. “However, they have yet to prove their underwriting merit.” Since September 2013, at least 31 ABS totaling $4.60 billion backed by consumer loans from marketplace lenders have been issued...