01/30/2009

Urgency Mounts as Industry Heads to Vegas

The almost 4,000 securitization professionals headed to next month's industry gathering in Las Vegas are desperate to revive their decimated corner of the financial market.

So forget the extravagant parties of years past.

Always an optimistic lot, most structured-finance pros expect private-label securitizations and related financing techniques to outlast the current slump. But it's becoming increasingly apparent that ensuring the market's survival will take a lot more work than anyone might have expected. That, in turn, makes those planning to attend the American Securitization Forum conference eager to press each other for ways to re-ignite issuance and trading.

The trade group's four-day confab kicks off Feb. 8 at the Venetian Hotel. More than 3,500 market players were registered to attend as of this week, including 1,100-plus investors and just under 600 issuers. More signups are expected over the next week. But overall attendance at "ASF 2009" won't come close to last year's event, for which some 6,000 registered, because of massive layoffs across the industry and other fallout from the credit crisis.

With asset- and mortgage-backed issuance at a virtual standstill and bonds trading sporadically at steep discounts on the secondary market, industry insiders feel an urgent need to use the sixth annual ASF summit as a forum for figuring out how securitizations will fit into a post-credit-crunch universe.

"The securitization world is much different today than at any other time in its history. This business is severely challenged," said George Miller, ASF's executive director. "We really need to take steps collectively at this year's conference to get the securitization market back on its feet."

The Federal Reserve's Term Asset-Backed Securities Loan Facility (TALF) will be a big part of those conversations. The $200 billion liquidity initiative, which is due to get underway next month, aims to foster lending by allowing investors to borrow against newly issued senior bonds backed by auto loans, credit-card receivables, student loans and small-business credits.

"TALF is all anybody wants to talk about right now. I have meetings set up with a slew of investors, hedge fund guys, and insurance companies," one auto-lending executive said. "They all want to talk about TALF and getting me to issue TALF-eligible deals."

The serious mood at this year's conference will leave little room for the numerous cocktail parties and costly banquets that dominated the event in previous years. Not that such diversions will be in great supply this time anyway, since the investment banks and bond insurers who used to sponsor most of them can no longer afford to do so. Some of those struggling institutions have also received substantial infusions of capital from the U.S. government over the last year, and they don't want to be seen as partying on the taxpayers' dime.

The upshot is that a vast majority of conference participants will spend most of their trip to Sin City huddled in meeting rooms, brainstorming about ways to get the ABS market moving again. Evenings will be reserved for small private dinners with clients or associates.

What's more, executives at several issuers said they won't participate on as many conference panels this year, if any. They want to devote more face time to investors, bankers and rating-agency analysts. For example: Ford has always supplied panelists for ASF's winter conference, but the 8-10 staffers it's sending to Vegas this year won't go near any microphones. They'll be too busy conducting more than 50 one-on-one meetings with holders or potential buyers of the company's auto-loan securities.

Regulatory issues will also occupy center stage at the conference. ASF has lined up panelists from a number of government entities, including the U.S. Treasury Department, Office of Thrift Supervision and European Central Bank. FDIC chairwoman Sheila Bair will be the keynote speaker on the morning of Feb. 9, when the conference officially opens.

Political rivals Karl Rove and James Carville will debate during a luncheon that day. The event replaces the ASF's traditional industry dinner, where celebrity acts including Jay Leno, David Spade and Blue Man Group entertained in the past. The dinner was yet another casualty of belt-tightening across the market, since it hinged on sponsors buying pricey tickets in bulk.

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