Concern over ABS op risk grows

Recent defaults, downgrades and losses have prompted increased concern among investors about the operational risks associated with securitisation, according to a new Standard & Poor’s (S&P) survey.

“In the past, investors just focused on credit risk, but they are now asking about the underlying deal mechanics too,” says Michael Gutierrez, a New York-based analyst at S&P and co-author of the report, which also cautions banks to take greater care to address the inherent operational risk in structured finance deals.

The S&P study says that servicer quality is the main operational risk concern. Investors are more cognisant of non-investment performance risks on the back of recent problematic