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Champagne Problems

Started by Peter, May 21, 2013, 11:00:00 PM

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AmCap

May 21, 2013, 11:00:00 PM
Like any securitization, LC's structure makes yields more attractive relative to risk in a lending situation because it provides diversification and liquidity.  This structure then encourages more people to lend, as we've seen over the last 6 months.  At what point does the borrower side of the benefit come in via lower cost of borrowing.  Part of the rationale for securitization in other contexts is that, as lending into the structure becomes more attractive and more lenders enter to market, interest rates should drop because of the increased supply of money.

When will LC get there?  At some point, to meet the demand on the investor side, aren't they simply going to have to lower yields to entice more borrowers to borrow?

TravelingPennies

#1
May 21, 2013, 11:00:00 PM
Funny you mention this. I was wondering the same thing. If they wanted to actually truly HELP the borrower they would lower rates up until investor appetite and Borrower needs have an equilibrium. This would suck for us, but most of us would stay put....since we have lack of choice for yield today.
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