Commenting on the unveiling of the details of the European Central Bank’s Asset-Backed Securities (ABS) purchase programme today, Richard Hopkin, Head of Fixed Income at the Association for Financial Markets in Europe (AFME), said:
“AFME appreciates the continuing support of the ECB for the European securitisation market in the form of today's announcement of more details of the ABS Purchase Programme ("ABSPP"). However, while the programme is very welcome, as President Draghi himself has acknowledged, in isolation it will not be sufficient to restore the European securitisation market.
“We believe that public sector investment, including in mezzanine tranches, will not be required if sufficient private sector demand can be generated. For that to happen, key regulations on capital charges, such as Solvency II and the Basel 269 RWA proposals, will need to be well-calibrated to encourage, not dissuade, private sector investors to participate - at both senior and mezzanine levels of risk - complementing and supporting the ABSPP. ”