Attendance at the ABS East conference hit a record this week even as industry participants are anticipating a recession. Parts of the ABS market are offering investors better returns than corporate debt.
Bank demand for agency MBS is weak, leading to wider spreads and losses on MBS holdings for some. Banks are also reducing their lending activity, providing an opening for nonbanks.
Vehicle ABS issuance reached a record $46.5 billion in the third quarter, and that doesn't count rental-fleet financing. But a sharp decline in auto-dealer floorplan securitization led to a slip in business ABS production. (Includes three data tables.)
When servicing on auto ABS transferred earlier this year following the failure of two issuers, delinquencies on the deals spiked. Months later, defaults remain well above the levels seen before the transfers.
Loans in a new ABS from Cross River Bank were originated in partnership with Upstart Network. Partnerships with banks provide interest-rate preemption to many nonbank lenders.
SFA published best practices for ESG disclosures for residential MBS and auto ABS. The association is starting with a limited number of disclosures and plans to expand the effort.
Issuance of auto ABS in the third quarter of 2023 has topped issuance from the second quarter. Issuers are seeing strong demand from investors despite rising defaults. An auto worker strike is also introducing some uncertainty.
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