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.
A pending proposal led by the Federal Reserve could see big banks facing higher capital requirements on their holdings of securities classified as available-for-sale.
SEC staff are considering revisions to a proposed rule that would prohibit conflicts of interest in the securitization market. But the agency reportedly won’t budge on some portions of the rule.
Another subprime auto ABS issuer closed its dealerships last week. Back-up servicers can help to protect investors from failing issuers, though there were some complications with a recent servicing transfer.
Speakers on a recent dv01 panel said unemployment would be a key factor in performance moving forward. Unsecured consumer loans are demonstrating some weakness, while auto performance is normalizing.
After playing defense in 2022, investors appear to be willing to deploy capital even as the MBS and ABS markets face numerous headwinds. Attendance at this week’s SFVegas conference hit a record level.
S&P Global Ratings said that the advantages of decentralized finance securitizations, including increased transaction speeds and greater transparency, are counterbalanced by several risks in the sector. Many of the risks are inherent to the use of a blockchain, like difficulty correcting errors in registered information.
Bank holdings of ABS backed by auto loans and financing for businesses rose solidly in the fourth quarter, offsetting declines in consumer and credit card securitizations. (Includes two data charts.)
Companies looking for financing that previously haven’t tapped the ABS market are seeing ABS issuance as an option due to changes in the broader financial market.
RSS