New issuers needed for French securitisation market, says S&P

New issuers must be attracted if funded issuance in the French securitisation market is to continue to grow, according to Nicolas Malaterre, a Paris-based associate director in Standard and Poor’s European structured finance ratings group.

“As the French market matures, established repeat issuers have come to make up a growing share of total issuance,” Malaterre said. “However, sustained growth will only result from new issuers using structured finance techniques, whether synthetic or cash.”

Malaterre said attracting new issuers to the market is important at a time when structured finance techniques are under the regulatory spotlight. “A clearer recognition among originators of the benefits of securitisation as a financing tool might go some way to mitigate growing concerns about the possible negative effect that regulatory or accounting changes could have on the market,” he said.

The French market saw growth of 43% in 2002 with total funded issuance at $9.68 billion, up from $6.76 billion a year earlier. A total of 24 transactions closed in 2002, up from 17 the previous year.

But by European standards, the growth of the French securitisation market - taking into account both funded and unfunded public transactions - has been relatively slow, said Malaterre. France ranks sixth in Europe by volume of issuance, behind the UK, Italy, Germany, the Netherlands and Spain.

Malaterre cited the French auto market as being particularly active last year, including loan securitisation deals issued by Renault and Peugoet Citroen. He also noted that the French structured finance sector has been particularly innovative, with the Jazz CDO I, the first hybrid cash and synthetic arbitrage collateralised debt obligation managed by Axa Investment Managers and arranged by Deutsche Bank, being a noteworthy transaction.

This year he expects consumer transactions will dominate the French securitisation market, including deals for large corporates who wish to securitise balance sheet assets such as commercial properties.