Asset Securitization Report

Banking and Finance partners Laurence Pettit, Gilbert Liu and Richard Rudder were quoted in an Asset Securitization Report article on esoteric ABS. Commenting on the demise of the monoline wrap - whereby investors did not do much due diligence once the deal got a triple-A rating - Liu was quoted as saying that most of the transactions he has worked on have never been wrapped, saying "Our investors are very sophisticated investors that do a lot of due diligence on the issuer and spend lot of time learning the asset classes themselves." He went on to say that as a label, esoteric deals are quite broad, with transactions ranging "...from those that are easily rated and highly secured to those that are quite unusual but are not wrapped." Commenting on Kramer Levin's work in the area, he said that timeshare deals are a particular focus, and fared well during the crisis, as did auto lease securitization transactions and government receivables relating to energy savings.

Rudder commented that many of the deals they work on are privately placed and "...have performed well throughout the crisis." While the credit crisis focused around commodity-type transactions, "...the esoterics did fine and that has helped to fuel interest in this area." He said that higher yields have led to an increased interest in esoterics from investors.

Pettit commented on Rule 17g-5, which requires issuers to maintain a website, for use by non-hired rating agencies, containing the information used to determine a rating, saying, "That kind of legislation hasn't impeded transactions in any significant way," and that any impact stemming from Dodd-Frank regulations on private, non-registered transactions remains to be seen.