When the European Central Bank (ECB) upped its threshold for repo-eligible ABS to triple-A beginning in March, this funding alternative shut down for emerging market securitizations, which could hit that rating only with a level of enhancement that is unavailable in today's environment. Given that erstwhile ABS investors still refuse to open their wallets, ECB funding through the repo window remains one of the only viable avenues for banking originators to raise capital. 

"There's no guarantee that [an eligible] RMBS will be included on the list', said Dmitry Sobolev, a senior associate at Avakian, Tuktarov & Partners. "It's subject to the absolute discretion of the Central Bank".

He added that it's possible that once the AHML guarantee is put into practice, the Central Bank might alter its rating requirements for Lombard admission in order for the wrap to make more sense to originators.
 

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