S&P Global Comments on SFIG
Last week, S&P Global Ratings distributed a brief "ABCP Research Update," entitled, "SFIG Vegas 2019 Conference Review with a Focus on ABCP." They wrote, "We recently attended the Structured Finance Industry Group (SFIG) conference in Las Vegas (February 24-27) where we participated in an ABS/ABCP investor roundtable breakfast, spoke with market participants, and attended panels and lectures on a wide array of topics relevant to asset back commercial paper (ABCP). We summarize the key points for you below. Despite the difficulties of navigating a developing regulatory environment and increased capital thresholds, several ABCP conduit sponsors intend to grow their ABCP asset portfolios and corresponding ABCP issuance in 2019; Prime institutional money market funds are returning to the ABCP market after their ABCP investment fell drastically following money market reform in 2016. As the funds grow in size again, their holdings in outstanding ABCP have surged from approximately 5% of certain programs to over 20%; Despite the increase in prime institutional fund ABCP investment, the ABCP investor base has also diversified significantly over the past year; Conduit sponsors are addressing risk retention requirements in different ways. Some conduit sponsors are buying at least 5% of their conduit's ABCP, while others are holding at least 5% of their conduit's funded assets, and some have determined that, based on the 2018 LSTA court decision, their conduit is exempt from risk retention; and, Some investors are expressing interest in the potential use of environmental, social, and governance (ESG) scores in ABCP."
