Green Shoots of Recovery in the Securitisation Markets?

This report analyzes the state of the global securitization markets as of May 2012, examining whether recent activity in residential mortgage-backed securities (RMBS) and trade finance signals a recovery that could eventually benefit climate finance. ItS It discusses how bank recapitalization pressures have reduced renewable energy lending, which relies on banks for 95% of project finance globally, making the development of securitized clean energy assets vital for recycling capital. The report evaluates market trends in Europe and the United States, the impact of regulatory frameworks like Basel III and Solvency II, and the role of standardization initiatives like the Climate Bond Standard and the Prime Collateralised Securities Initiative (PCSI).

• Bank recapitalization pressures have led to a decrease in business and project lending, specifically impacting renewable energy. This is critical because bank lending provides 95% of project finance globally.
• There are signs of recovery in the securitization markets, particularly in the UK with increased issuance of residential mortgage backed securities (RMBS) and whole business securitisation (WBS), such as a Centre Parks holiday parks WBS that was oversubscribed by more than 2X.
• The European securitization market contracted by 4.3% to €367.2bn in 2011 from a 2006 peak of €481bn. In the Eurozone, 76% of 2011 issuance was 'retained' by banks as ECB collateral, which limits private issue growth.
• The US securitization market shrank by 14.3% in 2011 to $1,784.9bn, with 92% of issuance originating from federal mortgage agencies like Fannie Mae and Freddie Mac, which crowds out private sector activity.
• Banks are increasingly using securitization to manage trade finance liabilities due to dollar liquidity shortages and Basel III reclassifications. For example, four out of five of Standard Chartered's Q2 2011 securitisations were trade finance related.
• Regulatory changes are creating headwinds for securitization: Basel III may discourage loan origination by limiting certain assets to 10% of common equity, and Solvency II proposed a 7% capital requirement for securitisations, which the insurance industry claims is excessive.
• Standardization efforts like the Climate Bond Standard and the Prime Collateralised Securities Initiative (PCSI) aim to boost investor confidence and liquidity by labeling high-quality assets and reducing adverse selection risks.

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} }