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Securitization of Mortgages and loans by Kenyan Banks
Rank: New-farer Joined: 6/22/2011 Posts: 30
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With high interest rates leading to the possibility of defaults, do you think banks will restructure their balance sheets by hiving of their loans portfolio especially mortgages creating asset backed utilities and selling them to wananchi? This is an opportunity for both private investors and banks.
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Rank: Hello Joined: 12/19/2011 Posts: 2
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I think banks will do it to free up their balance sheets to be able to lend more money.
The question is this, do we have a strong enough credit rating and monitoring agency to properly asses and assign credit ratings to the securitised loans. I do not believe so.
The US with very professional credit rating agencies (at least more competent than anything we have in Kenya to the best of my knowledge) were unable to correctly rate their asset backed securities.
Remeber Sub-prime, if we go ahead with this, we will have one in Kenya esp with a high interest rates.
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Rank: New-farer Joined: 6/22/2011 Posts: 30
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@ pesa.
Your right,the CMA Regulations on Asset Backed Securities 2007 article 38 states that, " all securitization transactions must be rated by an independent credit rating agency approved and registered by the authority".
Lets hope this spat goes away...
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Rank: Member Joined: 8/12/2010 Posts: 129 Location: nairobi
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a brilliant idear just came up!
to facilitate an ABS (ASSET BACKED SECURITY) SPV's (special purpose vehicles) are needed one can establish an SPV. the Regulation in kenya is the problem though
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Rank: Chief Joined: 1/13/2011 Posts: 5,964
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Coming soon and the process is in motion with the renaming of the NSE to Nairobi Securities Exchange. Two ETFs have since been launched on the NSE, next in line are REITs & MBS.
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Rank: Veteran Joined: 7/22/2011 Posts: 1,325
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Which ETFs have been launched? What do they track?
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Rank: Chief Joined: 1/13/2011 Posts: 5,964
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Nabwire wrote:Which ETFs have been launched? What do they track? FTSE NSE 15 & 25. The 15 has big caps KCB, SCOM, EQUITY e.t.c in different weightings.
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Rank: Elder Joined: 12/9/2009 Posts: 6,592 Location: Nairobi
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I don't envy the people who took those 11% mortgages from BBK.
BBI will solve it :)
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Rank: Veteran Joined: 7/5/2010 Posts: 2,061 Location: Nairobi
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Aren't mortgage backed securities what led to the systemic meltdown of the US financial system in 2007-2008? (over-simplified) ...why go down this route?
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Rank: Chief Joined: 1/13/2011 Posts: 5,964
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quicksand wrote:Aren't mortgage backed securities what led to the systemic meltdown of the US financial system in 2007-2008? (over-simplified) ...why go down this route? I think it had more to do with excessive greed & ignorance. In our case timing of entry & exit is key coupled with a victor mentality ;-)
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