Some 20 auto ABS have hit the market thus far in January, continuing momentum from a strong 2025. Meanwhile, the outlook for collateral performance is negative, though credit ratings are expected to hold.

In a first-of-its kind ruling, a bankruptcy court ordered a 2021 whole-business securitization from Hooters Restaurant Group to be cancelled and essentially re-issued.

Losses on auto loan ABS are near record levels. Still, there are pockets of opportunity for savvy investors.

While primarily known for mortgages, Rocket has been originating consumer loans since 2016. The loans are originated in partnership with Cross River Bank, providing federal preemption of state laws.

Prices for autos and other vehicles are expected to increase due to tariffs set by the Trump administration. That will likely lead to worse performance for securitizations, according to Moody’s Ratings.

S&P downgraded its ratings of a whole-business securitization from TGI Fridays, noting that cash flows are plummeting and the deal looks likely to default by early 2025.

Attendance at the ABS East conference hit another record this week, with investors showing strong demand for structured finance products. Issuance is expected to remain elevated, helped by interest rate moves.

Issuance of vehicle ABS is nearing another record and spreads remain tight, indicating that there’s plenty of investor demand for the asset. There are some concerns about performance, particularly for subprime auto ABS.

Delinquencies are projected to increase across asset classes, though some sectors will be hit harder than others.

Subprime auto deals that experienced distressed servicing transfers last year saw swings in delinquencies and ultimately took an elevated level of losses, according to Kroll Bond Rating Agency.