One of the most important ways in which the PCS initiative seeks to fulfill its mission to re-inforce asset-backed securities and risk transfer instruments as a sustainable investment and funding tool to strengthen the European economy, is by awarding the PCS Labels to specific asset backed and risk transfer instruments.
Awarded at the request of financial institutions which issue these instruments, the PCS Labels will be awarded, in the case of the True Sale PCS Label, to the senior most tranche of asset-backed transactions and, in the case of the Risk Transfer PCS Label, to an asset backed risk transfer transaction. In both cases, the transactions to which labels are awarded must fully meet the eligibility criteria set down by the PCS Association.
These criteria seek to capture some of the aspects of securities that are indicative of simplicity, asset quality and transparency and reflect some of the best practices available in the European securitisation market for both asset backed securities and risk transfer instruments. They also reflect the PCS Label’s focus on securitisations that fund the real economy and, in the case of publicly issued securities, are compatible with good liquidity. These criteria have been selected also by seeking to learn from the past and particularly from aspects of the market during the crisis that began in 2007.
However, market participant and visitors to this site must bear in mind that the selection of the criteria for both labels cannot reflect an objective, scientific process but is a subjective view as to what constitutes today simplicity, asset quality and transparency in the European market for asset backed securities and risk transfer instruments.
Market participants and visitors to this site must also remember that the PCS Label is not a recommendation to buy, sell or hold any instrument (including securities). Nor is it investment advice or a credit rating. The label does not seek to express any view about the creditworthiness of individual instruments. In this respect, it is imperative that you read our disclaimer, which may be found here.
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