Covid economy boosts outlook for subprime auto, investors say

By Jennifer Kang
14 May 2020

As the near term outlook for economic reopening remains uncertain, players in the market are expecting a rise in the demand for cars, as delivery services become more heavily relied upon and as a result of hesitation around public transportation that could persist long after the pandemic subsides. In the Covid economy, investors say that supportive fundamentals and well protected ABS structures are making subprime auto bonds an attractive buy.

In the years since the financial crisis, subprime auto ABS has occasionally drawn  comparisons to subprime mortgages, with cautious observers warning that the sector is built on a corner of the consumer economy that can easily find itself in a precarious position at the first sign of ...

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