Get Your TALF Securities While They’re Hot

Standish Mellon Asset Management Company LLC is one of the first financial services companies to offer investment strategies based on securities related to the Term Asset-Backed Securities Loan Facility (TALF). Standish said it is initiating these strategies because of strong expressions of interest from its clients. It expects to begin investing client money by early July.

“We believe that investors who are the early buyers of asset-backed securities (ABS) in the TALF Program have the potential for the biggest gains,” said Desmond Mac Intyre, president and chief executive officer of Standish. “As more money flows into these investments, the overall spreads should tighten and the opportunities for strong returns will diminish. However, it is important to remember the TALF program is essentially a buy-and-hold strategy which is dependent on strong upfront securities selection and price discovery. That is why our strong research team will be invaluable as we determine which securities are most attractive for our investors.”

What is TALF?

TALF (Term Asset-Backed Securities Loan Facility) is a plan to get credit moving again in asset-backed securities (ABS) markets by giving incentives to buyers of securities backed by highly rated credit card, small business, student and auto loans. Before the crisis, these type of securities made up about 40 percent of all consumer lending.

By offering loans to large investors to buy newly issued ABS, the Treasury hopes to spur all credit to flow more freely. The backing of the Fed removes some of the risk for buyers who invest in these securities. It is also expected to attract new hedge fund investors.

“We view the TALF initiative as having the potential to be the most successful of the government programs aimed at resuscitating financial markets,” said Tom Graf, managing director of structured products and global workout solutions.

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