Structural snags frustrate STS for synthetics
Curbs on excess spread and collateral stymie route to ‘high-quality’ signifier
The quest to restore balance-sheet synthetic securitisations to favour could face an unbridgeable divide for some of Europe’s originators. Regulatory requirements for meeting high-quality labelling status for synthetics – simple, transparent and standardised – come with structural restrictions that could inhibit the potential for market growth.
Market sources say that most deals would not qualify as STS, and while many of the changes needed to attain STS status would be entirely manageable, at
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