Issuance of non-agency MBS and ABS is still being completed, but at a slower pace. Spreads have widened for new deals along with trading in the secondary market.
Coronavirus-related risks for certain industries represent a significant danger to the U.S. collateralized loan obligations market, but diversification and liquidity buffers may help absorb the immediate impact.
JPMorgan Chase has issued its first ABS transaction backed by credit card receivables through Chase Issuance Trust since May 2018. A wildcard to the deal, however, is a pending lawsuit involving the issuance trust.
Issuance of aircraft-related ABS is expected to shoot up in the coming years but industry analysts are warning about potential performance issues. Fitch said it’s taking a cautious approach to rating new deals.
Since 2006, only one rated whole business securitization has defaulted. Investors in the deals are protected by various features, including a model that isn't particularly reliant on issuer profits.
Performance of the subprime auto ABS market is expected to decline, which likely will prompt higher credit-enhancement requirements from rating services.
Production of new MBS and ABS fell in almost every category during the first quarter of 2019, but several markets showed rebounding volume in March, a new Inside MBS & ABS analysis shows. Preliminary estimates indicate that a total of $310.04 billion of MBS and ABS was issued in the first three months of 2019, a 10.3% decline from the previous three-month period. It marked the softest quarter in new issuance since the April-June cycle ... [Includes three data charts]
Commercial banks and savings institutions increased their investment in non-mortgage ABS during the fourth quarter of 2018, though the industry’s appetite for the product remained tepid. [Includes two data charts.]
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