Finance

However, “I’m here to get drunk and have fun” may have been more appropriate. Held at Hotel Arts at the Olympic Port in Barcelona, it is the securitisation conference of the year. Everybody that’s anybody is there. A few may have been concerned by the absence of Morgan Stanley, but they were relieved to hear that a contingent had arrived by Thursday evening, including group head Ravi Joseph.
Gossip was rife from the start. Have you heard? Tamara Adler (ex-head of securitisation at Deutsche Bank) has resigned. The word got round fast as people ambled from party to party and before long there was speculation that she was moving to JP Morgan. And then… it was confirmed. And then there were the freebies. Everything from computer screen wipers, courtesy of Lovells, to beach bags, beach balls, sun hats and Frisbees.
The question was whether Swedish boutique bank Fredell would match up to its reputation. Last year the delegates were offered free condoms and the year before Bloody Marys, presumably to take the edge off their hangovers. This year the bank was handing out cigars with the slogan “Securitise before your assets go up in smoke”. But in between searching for the best freebies and gatecrashing the best parties a certain amount of serious work did get done. 2001 saw the biggest attendance to date, which was reflected in the sessions. Some may gloat that they were too busy to attend the formal discussion groups, but the size of the panel and the numbers in the audience is tribute to the growing success of the conference. Everything was covered: proposed legislative and regulative changes, strategies for each and every type of securitisation, including whole business and synthetic securitisation, a country-by-country analysis and a detailed look at the emerging markets.
The hot topics were numerous. The Basle Accord made headlines. The new bar proposals coming out of the Bank for International Settlements make it harder to get risk off balance sheet, therefore making structuring deals for non-investment grade corporates and marketing and selling sub-investment grade bonds more difficult. Also high profile were the new US accounting standards, FASB 140, from the Financial Accounting Standards Board (FASB), which will be implemented in March and which will provide new requirements for off-balance sheet financing in the US. However, it should be noted that they will also have a significant impact in Europe, where international conglomerates choose to report under US Generally Accepted Accounting Principles (GAAP).
Then there is the question of whether multi-line insurance companies providing a financial guarantee can be trusted. The recent case where the AIG subsidiary failed to pay up has led to accusations that multi-lines will continue to treat similar deals as an insurance policy and fall back on a raft of defences as reasons not to pay. The consensus is that if the policy isn’t guaranteed, it should be avoided. The case, currently at the Court of Appeal, has fuelled speculation that the insurance and banking industries may well be incompatible.
An issue that received less than its fair share of attention is the move towards special services deals in Europe. Deals are increasingly following the US trend and it is becoming more common to discuss the appointment of a servicer who will manage the assets if they get into difficulty. The trend, which is favourable with rating agencies, is likely to make sub-investment grade bonds more attractive. In fact, according to some, it is the key to opening up the market.
Despite the networking appeal, more people than last year attended the sessions. No one wanted to let slip structural secrets, but there was a general willingness to learn from the discussions. In fact, in a number of the sessions there was standing room only – a first for this conference and impressive despite complaints that the size of the panels impinged on the depth of the discussions.
But however great the success, it’s clear that most people were catching up with friends and colleagues and were determined to have a good time. Whether you chose to attend Credit Suisse First Boston’s banquet at Gaudi’s Parc Guell or the UBS Warburg boat party, it’s pretty much a dead cert that you will have ended up at the Baja Beach Club, where you would be hard pushed to avoid the free tequila (and a host of other treats). Tough call.