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.
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.
Delinquencies and losses on subprime auto ABS have been rising. Improved underwriting and inflation leveling out could help improve performance, according to industry analysts.
Issuance of home-improvement securitizations came in at $3.5 billion in 2023, according to Kroll Bond Rating Agency. Some of that volume was in privately-rated deals that haven’t been disclosed to this point.
Moody’s Investors Service said performance for student loan ABS is seeing issues as a result of public policy moves around student loan debt and a resumption of payments after a several-year pause.
Equipment ABS and other types of corporate securitizations should hold up well, even in the face of an economic slowdown, according to projections by Moody’s Investors Service.
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