How is the securitisation industry responding to the Covid-19
fallout and how is it impacting securitisation structures?
Securitisations are typically structured to withstand varying
levels of disruption to cashflows and that is why they have fared
better than unsecured debt and equity in these relatively early
days of fallout from the pandemic. We are seeing a number of
products being resilient both in terms of their structuring and the
quality of their underlying portfolios. Structural protections
built into deals such as liquidity support, reserves, cash trapping
and diversion of cash are all being utilised.
Throughout March and April 2020, the US government passed three
main Covid-19 relief packages and one supplemental one, totalling
US$2.8trn, making it the largest stimulus package in US history.
For most securitisations linked to consumer receivables, the
stimulus should help soften the pressure on securitised cashflows
over coming months, but to what extent
