European ABS on its feet and ready for more in 2026

European securitization is hoping to match all the feats of 2025 and more in 2026, with a key theme being the entrance of even more debut issuers in the market.

Market participants appear convinced that another new issuance volume record will tumble in 2026, with 97% of respondents to GlobalCapital’s outlook survey predicting volumes will either be the same as 2025 or higher. Public issuance in 2025 is on course to beat the record set for post-financial crisis volumes in 2024.

Meanwhile, spreads are forecast to remain resilient. Only 7% of survey respondents predict spreads will move “much wider” in 2026, but 41% of respondents predict a slight widening.

Spreads in some markets sit near recent tights. Enra set the tightest spread for three years for UK non-conforming RMBS with its Elstree 2025-1 trade from February, which was priced at 72bp over Sonia, although the asset class had retreated around 10bp towards the end of the year.

“I’m expecting spreads to stay broadly the same in 2026,” says Florence Coeroli, UK and global head of engineering at Société Générale. “We’ve obviously had periods of extreme volatility in 2025 leading to some spread softening, but we have gotten over this turbulence and spreads appear to be stable now.”

For example, that resilience was visible after the equity market drop following US tariff announcements on April 2, when the ABS market only needed about a month to recover and start pushing tighter again.

However, despite the tight spreads, investors continue to make the case that securitization looks an attractive proposition compared to other asset classes.

“Spreads across fixed income are certainly tighter now than they were a year ago, but you still get a decent amount of carry [and attractive] risk versus return,” says Kate Galustian, head of BlackRock’s EMEA and Australia securitized assets team.

“I would argue there’s a place for [securitized credit] in portfolios. You do have to acknowledge where spreads are, but they’re not at the absolute tights, whereas they are [at] or at least close to [absolute tights] in some sectors outside [securitization].”

Even better, investors can expect the range of collateral on offer to broaden further in 2026, after an already impressive 2025 for debut transactions, from auto lender Vehis in Poland to Islamic finance provider StrideUp in the UK.

“It’s always good to see new issuers and new or lesser-seen collateral types in the market,” says Maddi Rowlatt, European ABS portfolio manager for Challenger Investment Management, “because if we can do that extra bit of credit work to get comfortable with the underlying collateral and underwriting, they continue to present opportunities for investors to earn a premium over more traditional platforms and provide diversity to portfolios.

“Newer asset classes also demonstrate a healthy securitization market.”

Private financing activity in 2025 provides a leading indicator of what could appear in the public market next year.

“I’m pretty confident that we’re going to see a lot of debuts going into 2026,” says Andrew Vickery, partner at Linklaters, “just based on the high volume of warehouse facilities and forward flow agreements we have seen in 2025. And as originations pick up, these lenders are going to start looking at the public ABS market.”

The other aspect of this trend is that these debuts will be predominantly coming from non-bank lenders as opposed to banks, which have the benefit of being able to use deposits for funding and so often just use securitization as a means of funding diversification.

“A lot of this activity is in the specialised lender space, both secured and unsecured consumer lenders, SME lenders and mortgage lenders,” says Vickery. “So while regular bank issuers will continue to be active in 2026, we should be seeing a lot more debut issues from specialist lenders.”

GlobalCapital’s survey suggests the market is not convinced that there will be a flurry of first timers, but 38% of survey respondents expect more than 10 debuts.

The theme of 2025 has broadly been to build on the new asset classes that emerged in 2024, those being data centre and solar ABS. This is all set to change with the emergence of new asset classes in 2026, with the main trailblazer being the buy now, pay later (BNPL) asset class.

“I think BNPL ABS is an asset class that will begin to develop in 2026,” says Coeroli, “as there is a good level of demand from investors for these types of assets, and it feels like a natural evolution from the consumer ABS products that investors are familiar with.”

There was plenty of private market BNPL activity in 2025, a notable example being Klarna’s €1.4bn warehouse for its German BNPL receivables set up in August.

“We should see some BNPL activity from the well-known players; maybe two or three transactions,” says Susanne Matern, EMEA head of structured finance at Fitch. “But it’s still an area where it is somewhat hard to define what counts as BNPL. For example, some would say it has to be paid in one instalment to count as BNPL, so there is a grey area as to what will fit under this umbrella.”

The other asset type where originations are growing fast is bridging loans. Cerberus broke ground with its Fairbridge 2025-1 deal in November, a Dutch BTL RMBS backed by a pool of which 8.3% was bridging loans, proving it is possible to fund these loans through a public securitization.

Now public RMBS is beginning to look like a viable option for financing these receivables; 2026 could be the year more issuers enter this market.

One of the key problems in this market is that, although there is growth, it is split between about 450 lenders, of which maybe six have portfolios as big as £250m-£300m. This creates a problem as bridging loans are short dated, meaning securitizations of them would need to be issued with a revolving structure.

“Investors will need some assurance that as new assets are added to the pool [for BNPL ABS or bridging RMBS], the characteristics they underwrote on investment won’t fundamentally change,” says Rowlatt. “So these are transactions where we really need to see the structure, monitor eligible collateral constraints and the ratings methodology to make appropriate credit decisions.”

It is unlikely any single originator will be able to build up a large enough origination capacity to keep adding homogenous loans into a public, revolving RMBS of bridging loans.

Hope could come in the form of a bridging loan aggregator — like Toorak in the US residential transition loan market — which could use loans from numerous lenders, or by integrating bridging loans into traditional types of RMBS, as with the Cerberus deal.

“We think bridging loans are best financed through warehouse facilities right now,” says Alessandro Pighi, head of EMEA RMBS at Fitch, speaking before the Cerberus deal was announced. “So unless warehouse pricing becomes less competitive it seems unlikely these loans will be financed via public RMBS, but there is the possibility of bridging loans being added to BTL deals but only as a minority portion of the portfolio.”

One of the standout stars in 2026 is expected to be data centre ABS and the asset class could be a hot spot for debut issuers.

“We are expecting more operators to enter the European data centre market, with about four to six transactions likely in 2026,” says Matern. “We are expecting this to be dominated by securitizing hyperscaler facilities using an ABS-style structure, as opposed to a five year CMBS.”

This asset class been the preserve of one sponsor so far in Vantage, which priced a German data centre ABS trade in May 2025.

That example proved it was possible to securitize these assets and that there is investor interest in the bonds. Plenty more sponsors are looking to follow.

It also helps that Europe CMBS, long dominated by Blackstone logistics deals, has had a phenomenal 2025 with more to come in 2026.

“For the traditional CMBS market, so not including data centres, we could see an increase in volumes of up to 25% compared to 2025,” says Matern.

Volumes spiked and more sponsors, like Carlyle, entered the market in 2025, diversifying asset types away from logistics, with retail and office components being added into some deals from Bank of America’s Taurus shelf.

This is even without mentioning Blackstone’s enormous £1.5bn private CMBS as part of its refinancing of the Haven portfolio of UK holiday parks in August.

Those in the market feel positive that this momentum is set to continue, with 47% of survey respondents expecting between nine and 16 deals in 2026.

“For traditional CMBS we are expecting a continuation of logistics-based transactions but also potentially office transactions,” says Matern. “We may also see one or two [commercial real estate (CRE)] CLO structures. There should be a wide variety of property types on top of logistics too, for example multifamily housing backed transactions.”

There has only been one CRE CLO in Europe, Starz Mortgage Securities 2021-1, arranged by Credit Suisse.

Innovation has also been the name of the game for debut issuers in the sterling RMBS market in 2025. Waterfall Asset Management priced Europe’s first home equity line of credit (Heloc)-backed RMBS with collateral from Selina Finance, StrideUp priced the first Islamic finance RMBS since 2018, and there was more activity in later life and equity release RMBS.

Equity release is likely to grow further in 2026, as there are more mortgages to work with than in the Heloc or Islamic mortgage markets, although there is plenty of growth in these sectors too.

“Of the esoteric RMBS products we have seen in 2025, equity release probably has the best chances of growing,” says Pighi, “as there have been a few deals already so from a structuring perspective there is a clear path for future deals to follow.”

Indeed, Waterfall Asset Management’s Lifetime Mortgage Funding 2024-1, priced in late 2024, was followed up by USS joining the market as a sponsor with Summerhouse 1 in August.

The deals have proven a model, where sponsors can obtain leverage by structuring matching adjustment-eligible notes for insurers’ balance sheets and then placing mezzanine bonds with traditional RMBS funds. It ought to pave the way for more such issuance in 2026.

There is also room to innovate within established securitization asset classes, for example by grouping assets that have rarely been securitized together before.

“We think we might see some changes to existing products,” says Pighi, “so for buy-to-let there is a push for including mixed use and small commercial assets as their yield is higher than standard residential BTL. We’ve seen this happen in the Netherlands, so the UK is likely to follow.”

Together, the UK specialist lender, has been originating and securitizing small ticket CRE loans for years, although its lending is often judged to be at the riskier end of the spectrum. Other lenders have taken an increased interest in the sector too, with Enra, a UK specialist property finance company, launching a commercial mortgage product in October, after running a pilot earlier in the year.

There has also been innovation in structures. UK SME credit card provider Capital on Tap became the first non-bank lender to launch a master trust since NewDay in 2015. Bank of Ireland UK launched a new UK RMBS master trust debut, while France’s BPCE did the same with French mortgages.

More such structures are expected in 2026. “One of the themes of 2025 has been around issuers taking advantage of positive or stable market windows, as we saw in September, the busiest month of supply since May,” said Challenger’s Rowlatt. “We expect this feature of the market to continue and to benefit those issuers who have master trust structures or repeat issuance platforms as they are able to be much more flexible given the speed to market for new issues.”

Banks and specialist lenders appreciate the flexibility the master issuer structure brings, so are willing to pay the high costs of setting one up with the intention of staying in the market for the long haul.

Whether it is through new assets, new issuers or new structures the stage is set for European securitization to step up again in 2026.

Additional reporting from George Smith