Aircraft ABS spreads tighten but collateral stress remains

Business jets 575 375
By Jennifer Kang
17 Nov 2020

The aircraft ABS market saw spreads tightening by as much as 75bp last week, driven by optimism over coronavirus vaccines, and spreads are continuing to benefit from the hope that travel will soon recommence. Despite the market’s positive reaction, sources caution that the tightening could be short-lived, as it will take longer than anticipated to see collateral performance fully recover to pre-pandemic levels.

According to data from Bank of America, spreads tightened 75bp last week for aircraft ABS. Other higher yielding commercial sectors also benefited from the news, with container and railcar spreads coming in 15bp and 25bp respectively, and whole business ABS tightening by 10bp.

The aircraft ABS ...

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