The auto ABS market saw a busy October, but not much more issuance activity is expected before the end of the year, according to Elen Callahan, director at Deutsche Bank. That’s because Reg AB II will go into effect on November 21, and many investors are trying to get ahead of that, Callahan said during her presentation at the Auto Finance Summit 2015 in Las Vegas.
“We saw $2.8 billion [in October], which is above the $2.5 billion average that we’ve seen all year,” Callahan told Auto Finance News. “Next year it’s disclosure requirements that have to be changed, so trusts have to kind of accommodate that for next year.”
Through Reg AB II, the Securities and Exchange Commission is adopting standardized asset level disclosure requirements that it believes “will allow an investor to better conduct his or her own evaluation of the ongoing credit quality of a particular asset, risk layering of assets, and overall risks in the pool underlying the ABS,” according to documents published in the Federal Register by the SEC in September 2014.
Callahan is hopeful though, that any disruption to the ABS pipeline will not carry over into 2016. “We knew this was going to go into effect two years ago, people have been working towards it,” She said. “There are more disclosure requirements, but hopefully by next year, it will be all addressed.”
