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http://www.securitization.net/article.asp?id=1&aid=8258


 What deals have been done in the European primary market since last August have been primarily structured for ECB repo collateral. For example, according to data from the Bank of Spain, Spanish bank use of the ECB window rose to a record high in April, which is consistent with what has been seen in terms of primary retained securitization deal flow.

In May, ECB repo funding to Spanish banks (including foreign entities with offices in Spain) had risen to 47.88 billion ($74.1 billion), from 20.28 billion a year ago, according to the Bank of Spain.

The spanish banks (or more specifically, the cajas actually), already have dozens of billions of securitized domestic shitpile, repo'ed at the ECB.
They have been securitizing it only for the sake of getting new money in exchange (there is no private market for this any longer).

The govie fund looks tailored to take these shitpiles when the ECB won't roll the repo (presumably because it becomes impossible to pretend that the underlying loans are still performing). The 2.x % delinquency rate in Spain seems to me, straight out of la-la-land. There have been way too many loans with no money down, 40% of revenue in payment, variable rate with initial euribor @ 3.5%. The true delinquency rate simply cannot be single digit. Now the banks might prefer not to call these delinquent, and give a free neg-am option to the borrowers...

Pierre

by Pierre on Wed Oct 8th, 2008 at 12:13:03 PM EST

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