Securitization, at its most basic, is a sound financing technique. This is my basic tenet for today’s blog. With the ABS markets again beginning to pick up, spreads tightening and investor demand growing but supply still limited, it is time for a revisit of just what makes this market so important from a corporate perspective, and why it is way-past time for stakeholders to get it right in rebuilding the market.
I am not here to argue the validity of the regulatory arbitrage that drove the market to such great heights before the crisis. In fact, that is most definitely one of the things that should be addressed as the new world of securitization takes shape. What I am here to argue is the validity and soundness of securitization at its most basic, as a financing structure for corporates.