A year after seeing asset-backed securities take a complete nosedive off a cliff in terms of issuance (and value in a lot of cases), the National Credit Union Administration (NCUA) is now soliciting proposals from underwriters as it tries to repackage a gargantuan amount of mortgage-backed securities into a deal. $50 billion worth, to be exact.
The NCUA, which is essentially the credit-union equivalent of the FDIC according to Asset Backed Alert, took on the bonds after bailing out credit unions US Central and WesCorp. Chair Debbie Matz says NCUA is trying to ditch the assets by securitizing them and selling them off soon. The details of the plan should be firmed up by June if all goes according to plan.
There are two reasons as to why this issuance should have your attention:
First, more bank and credit-union failures are expected during 2010 compared to 2009. As these firms fail, the FDIC and NCUA will have to take more firms into receivership along with their assets. Securitization is the key to getting some money in the coffers and the assets off the books.
Second, 2010 has been a huge year for the securitization industry thus far. Looking at the chart below, anybody with two eyes can see that worldwide ABS issuance has continually recovered from the beginning of 2009 and into 2010. Non-agency (meaning non-GSE related) MBS issuance has also increased in March of 2010, nearly doubling February’s numbers. If anything is alive and well, its the securitization industry.
Photo: Asset Backed Alert
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