Liquidity is a Concern in Securitization Market, Santander CFO Says

BOSTON — Liquidity has become a concern in the capital markets, Ismail Dawood, chief financial officer of Santander Consumer USA, told attendees in early June at the AFSA Credit Summit for Fixed Income Investors.

“In the ABS market, what you saw was spreads widening between December and February,” Dawood said. “As far as credit losses, Q4 — all was bad, all the lenders came out with losses.”

In early April, spreads started to come back in quickly for SC and similar lenders, but not as quickly for smaller players, Dawood said. “So capital markets, on a liquidity and funding perspective, is bifurcating some of the issuers,” he said. “We’ll see if that trend continues or not; maybe it’s stabilized, maybe not. We’ll probably need to see a couple more issuances through the summer and fall to say that really stabilized.”

SC securitized $1.6 billion in the first quarter: $1 billion through its SDART platform, which has a weighted average Fico of about 600, and $639 million through its DRIVE platform, which has a weighted average score of about 550.