The aim of the Prime Collateralised Securities (“PCS”) initiative is, and has always been, to strengthen the securitisation market as a sustainable investment and funding tool for both investors and originators with the aim of improving market resilience in Europe, promoting growth in the real economy whilst, at all times, maintaining standards of quality, transparency, and simplicity.
As the crisis unfolded in 2007/2008, the asset backed securities market came under substantial criticism as some securitised products played a major role in the financial difficulties. Badly underwritten products, opaque structures and over-leveraged issuance performed very badly and weakened the world financial system. Yet, a number of years later, we can see that the vast majority of European securitisations came through the crisis unscathed. They have, in fact, demonstrated incredible credit resilience and strong price performance. They are the proof that simple, transparent and quality securitisations are a healthy and robust part of the financial architecture. As Europe seeks to return to growth and prosperity, a healthy financial flow of credit to consumers, SME’s and corporations will be a key component. PCS strongly believes, as do many policy makers, that a strong and resilient asset backed market in an indispensable part of that growth and prosperity.
By building on the lessons of the past, the PCS initiative – as an independent entity – seeks to define and promote standards of “best practice” in both the “true sale” and “risk transfer” asset backed markets: standards of quality, transparency and simplicity.
Through its role in helping define these standards, its advocacy role in promoting them and its label, awarded to securitisations that meet them, PCS seeks to re-vitalise a healthy asset-backed market that directly benefits the real economy within a strong regulatory framework.
The heart of the PCS initiative is the PCS Labels. Both the True Sale PCS Label and the Risk Transfer PCS Label can be awarded to securitisation issuance meeting the strict criteria set by PCS. Transactions which have been awarded and maintain a PCS Label can be found listed here (for True Sale transactions) and here (for Risk Transfer transactions).
The PCS Label criteria seek to embody the PCS mission. They focus on issues of quality, transparency and simplicity. They are not, however, a credit rating. They do not seek to rank or measure the creditworthiness of the obligation to which it is awarded. They are informational and designed to assist investors and market participants in understanding aspects of the labeled securities or risk transfer instruments. They are not a recommendation to buy, sell or hold any securities.
We strongly advise all visitors to this site to read our “Disclaimer” section for a better understanding of the nature of a PCS Label.
Although issuers pay for any label, PCS is a not-for-profit operation. Therefore, all revenue generated from labels goes solely to covering the cost of the labels and of the ancillary activities of the PCS initiative, such as working towards better standards in the asset backed market and advocacy for such standards.
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