Global SIV Market Expects New Vehicles and Capital Growth

The global structured investment vehicle (SIV) market is set to show further growth in the year ahead, including new entrants from the second quarter onwards, according to a report by Standard & Poor’s. ‘Last year was characterized by consolidation, following the flurry of new entrants into the market in 2002,’ said credit analyst Suresh Hegde. ‘SIV senior and subordinated debt issuance increased steadily as the newer players pushed towards critical mass and the incumbents continued to successfully enlarge their debt franchises. This year will likely see a combination of both factors: steady growth from existing vehicles and the appearance of a number of new entrants, the first of which may surface as early as the second quarter.’ Hegde continued: ‘Market conditions for building asset books have been testing for managers with respect to oversubscription and prolonged spread compression in a number of standard asset classes that SIVs traditionally favor. Managers have, however, been helped by strong demand for their paper, specifically MTNs, which has significantly reduced the cost of funding this past year.’

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