The ABS market's record year has a catch
About this episode
Teri Savage discusses the record pace of asset-backed securities issuance and the critical importance of security selection amidst a bifurcated consumer landscape.
Record asset-backed securities (ABS) issuance. Spreads at year-to-date tights. But underneath, a bifurcated consumer is quietly narrowing the margin for error. Teri Savage, Senior Trader on RBC GAM's BlueBay U.S. Fixed Income team, breaks down what's driving the ABS market's record pace, and why security selection has never mattered more. ABS gross issuance is on pace for a record year, fueled by funding costs, diversification needs, consumer debt growth, and new sectors entering the market - yet spreads now sit at year-to-date tights across most subsectors. The consumer is holding up overall, but the picture is bifurcated: stress is concentrated in subprime borrowers, and while early-stage delinquencies remain below pre-pandemic levels, they're expected to rise gradually as higher rates increase pressure. With spreads historically stretched and the wiggle room for error narrowed, risks span geopolitical, technical, and fundamental factors — making credit tiering and active security selection increasingly critical for ABS investors.
More episodes of The Weekly Fix
- The credit upgrade nobody's pricing in
- Rates may have peaked. AI's credit boom is just getting started.
- The rate cut era is over
- The AI job shock nobody’s talking about
Explore listener stats, chart rankings, contacts and more on the The Weekly Fix podcast page.