Auto asset-backed securitization volume ticked up year-to-date as investors’ appetite remained steady.
Auto asset-backed securitization (ABS) volume was $57.5 billion through April 24, up 5.1% year over year, according to the latest data from JPMorgan Securities.
“The record pace of ABS issuance has been well digested to date, with broad participation from various types of investors,” Amy Sze, managing director of U.S. ABS research at JPMorgan Securities, said in an April 24 research note. Asset managers and pension funds were the top purchasers for auto YTD, she noted.
By asset type, according to JPMorgan Securities, issuance volume through April 24:
- Fell 2.8% YoY for prime loans to $24.7 billion;
- Climbed 6.1% YoY for nonprime loans to $15.7 billion;
- Climbed 25.5% YoY for lease volume to $13.3 billion; and
- Fell 2.6% YoY for fleet and others to $3.8 billion.
Spreads narrow slightly
Auto ABS spreads also narrowed during the past two weeks as negotiations between the United States and Iran resulted in the temporary opening of the Strait of Hormuz. Spreads, however, remain elevated compared with the last reading on Feb. 26, prior to the Iran war beginning on Feb. 28.
Spreads on AAA-rated three-year prime notes, for example, were at 43 basis points (bps) over Treasuries as of April 23, tighter by 2 bps compared with the reading on April 2 but up seven bps compared with Feb. 26, according to JPMorgan Securities data.
Spreads for investment-grade subprime notes remained wider on April 23 compared with the last pre-war reading.
For example, spreads on A-rated three-year notes were 110 bps over Treasuries as of April 23 compared with 80 bps over Treasuries on Feb. 26, according to JPMorgan Securities data. Some tranches, however, have narrowed from their highest levels since after the start of the war.
Spreads may flatten slightly but a substantial change is unlikely without an end to the Iran war, Sze said in the research note.
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