Zilcho sign of recovery in the ABCP market, as spotted by Alea.
The below graph, which we’re dubbing the ABCP Matterhorn, from the Fed:
Why is this important? ABCP conduits are were, certainly in Europe, the major buyers of triple-A rated, low-yielding securitised paper. A world devoid of ABCP conduits is a world devoid of a meaningful securitisation market.
Taking up the slack? Taxpayers. The below datapoint from JPM research:
In 2008, €711bn of securitisations were issued in Europe: 95 per cent of which were retained for use in central bank repo actions.
Government actions are not solving the underlying mechanical problems with the crisis; they’re providing temporary relief. The markets that fuelled the last decade of house price rises and credit card spending are still broken. It is yet to be seen whether they are irrevocably so.