Green Shoots of Recovery in the Securitisation Markets?

The report identifies 'green shoots of recovery' in securitisation markets, particularly through increased residential mortgage backed securities (RMBS) in the UK and trade finance securitisations. While investor demand is returning, the report argues that supply is constrained by heavy government intervention (such as by the ECB and US federal agencies) and stringent new regulations like Basel III and Solvency II. The author suggests that the normalisation of these markets is vital for climate finance, as 95% of project finance globally comes from bank lending, and securitisation allows banks to recycle limited capital to fund renewable energy and energy efficiency projects.

• Bank recapitalisation pressures have reduced business and project lending, which is critical since bank lending provides 95% of project finance globally.
• There are signs of recovery in the securitisation markets, evidenced by increased residential mortgage backed securities (RMBS) in the UK and the oversubscription of Centre Parks' holiday parks whole business securitisation (WBS) since 2010.
• The European securitisation market contracted by 4.3% to €367.2bn in 2011 from a 2006 peak of €481bn, partly because 76% of 2011 issuance was retained by banks as ECB collateral.
• The US securitisation market is shrinking and heavily dependent on government agencies, with 92% of 2011 issuance originating from entities like Fannie Mae and Freddie Mac, which crowds out private sector activity.
• Trade finance securitisation is being used by banks, such as Standard Chartered and JP Morgan, to maintain liquidity and offload balance sheet liabilities in response to Basel III changes and dollar liquidity shortages.
• Regulatory frameworks such as Basel III and Solvency II may discourage securitisation; specifically, Solvency II's proposed 7% capital requirement for securitisations is viewed as excessive by the insurance industry compared to 0.9% for corporate bonds.
• The Climate Bonds Standard and the Prime Collateralised Securities Initiative (PCSI) aim to increase investor confidence by labelling high-quality assets, with the potential for the ECB to reward PCSI assets with a lower repo haircut than the current 16%.

APA

Molony, T. (2012). Green Shoots of Recovery in the Securitisation Markets? Climate Bonds Initiative. https://www.climatebonds.net/news-events/blog/green-shoots-recovery-securitisation-markets

Chicago

Molony, Tadhg. Green Shoots of Recovery in the Securitisation Markets? Climate Bonds Initiative, 2012. https://www.climatebonds.net/news-events/blog/green-shoots-recovery-securitisation-markets.

Wikipedia

{{cite report |last1=Molony |first1=Tadhg |title=Green Shoots of Recovery in the Securitisation Markets? |publisher=Climate Bonds Initiative |date=16 May 2012 |url=https://www.climatebonds.net/news-events/blog/green-shoots-recovery-securitisation-markets |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{molony2012green, author = {Molony, Tadhg}, title = {{Green Shoots of Recovery in the Securitisation Markets?}}, institution = {Climate Bonds Initiative}, year = {2012}, month = may, url = {https://www.climatebonds.net/news-events/blog/green-shoots-recovery-securitisation-markets}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }