Private MBS Has Potential to Overtake CLOs in Structured Market

The $600 billion market for mortgage securities that lack guarantees from Fannie Mae and Freddie Mac is expanding quickly and has the potential to become the single largest component of the structured credit market, according to Ellington Management Group.

So-called “private label” mortgage bonds could grow in coming years to over $2 trillion in total market value, a more than three-fold increase from today, Ellington writes in a white paper. Within five years this market may overtake the global universe of collateralized loan obligations — currently around $1.4 trillion — as the biggest part of the structured market, according ...