Jersey City, New Jersey â 31 Jan 2006 - Principia Partners LLC, a leading solution provider for the management and administration of structured finance operations, today announced it has integrated European ABS (Asset Backed Securities) pricing from Markit Group Limited (âMarkitâ) for the benefit of mutual customers. Markit is the benchmark industry source of independent pricing and valuations for the global financial and energy markets. This enhancement greatly augments the ability of the Principia SFP (Structured Finance Platform) solution to meet the portfolio management and operational processing requirements of structured finance operations as well as those of investment managers of ABS securities.
Markit, a pioneer of daily mark-to-market credit derivatives pricing, recently launched a new service that provides both composite and contributor pricing data on ABS securities issued in the European markets. The only multi-dealer platform for European ABS pricing, Markitâs service is backed by over twenty leading market makers who provide same day bid / offer prices, and the spreads and average life assumptions on more than 3,500 European ABS. The coverage includes European Residential Mortgage-Backed Securities (RMBS), Commercial Mortgage-Backed Securities (CMBS), Asset-Backed Securities (ABS), and cash Collateralized Debt Obligations (CDO).
The integration of Markitâs ABS pricing addresses one of the most critical gaps in the industry: the lack of independent pricing, which results in an inefficient process for end-of-day mark-to-market of ABS portfolios. Principiaâs clients are among the largest portfolio managers of ABS/MBS securities and structured credit products. With the Markit data integration, the Principia SFP solution enables these mutual customers to have additional precision and control over the management of their portfolios from deal entry through risk management, compliance and accounting. The solution can also be integrated with Intex ABS/MBS models. Intex is a leading provider of data, models and related software for the structured fixed-income market and the integration provides a comprehensive ABS/MBS management platform that can meet the needs of structured credit investment managers and structured finance operations for more deal transparency, timely position keeping and accurate accounting. Principiaâs integration of Markitâs ABS pricing builds on the companyâs existing incorporation of Markitâs CDS (Credit Default Swap) data.
âThe ability to easily retrieve clean and accurate ABS pricing is more important than ever within the structured finance investment community,â states Dr. Douglas Long, EVP â Business Strategy at Principia. âOne of the biggest operational hurdles in managing ABS instruments today is the need to validate prices from dealers, often from multiple independent sources. The process is extremely manual, thus prone to human error, and still requires further manual processing for data scrubbing and preparation,â he continued.
Once imported, pricing data from Markit can be further handled and analyzed within Principia SFPâs robust cashflow and exposure (risk) framework. Users will be able to use prices to imply option-adjusted spreads as well as calculate risk attributes. Users will also benefit from the ability to manage ABS products along with liabilities (issuances or funding instruments) and derivatives on a single platform. This combination of broad functionality and integration helps to resolve a core technology issue for many structured finance operations such as structured investment vehicles and other securities arbitrage vehicles.
Kevin Gould, Executive Vice President of Markit and Head of Data Products and Analytics said, "We are pleased to offer mutual customers independent consensus pricing for the European ABS market, within the Principia product suite, and hope our efforts will boost efficiency and transparency in this fast growing asset class.â
Markit expects to extend its ABS pricing service into the U.S. arena later this year.