The credit card ABS sector is hoping for a divided government to avoid inflationary pressures on the sector, regardless of who wins the election, panellists at Invisso’s ABS East said on Monday.
Tom Neagle, managing director for securitized products origination at Mizuho said the election will play a key role in future credit card issuance because either a Kamala Harris or Donald Trump presidency would be inflationary, "although in two very different ways" if they won handsomely and gained control of both the senate and the house.
"I view the election through that context irrespective of the winner," Nagle added. "If their policies are put in place and if they have the control of all branches of the government to enact the policies that they want to do that’s likely inflationary. The investors we’ve spoken to are most hopeful for a divided government which prevents anybody [from going too far with their policies].”
Megan Dwyer Agar, managing director for structured products origination at Guggenheim also said on the panel that policy changes could have a heavy impact on consumers in the event that either the Democrats or the Republicans manage to seize the executive and legislative branches.
“Beyond the macroeconomic impact on our consumers and creditor borrowers I think a lot of the policy decisions and potential regulatory changes will come down to the impact on the underlying consumer,” said Dwyer Agar.
“Consumers right now are pretty well-served by credit cards. It’s an essential source of liquidity and funding... so, I'm sceptical that there’s going to be any kind of big regulatory shift that would jeopardize that for consumers."
Both agreed that credit card issuance pulled forward heavily this year to avoid pricing too close to the US presidential election on November 5. As a result, the sector will likely remain quiet until the dust settles and a new president is sworn in.
Throughout 2024 there have been 24 credit card ABS transactions, across bank cards and retail cards, according to Finsight data. This is down from the sector high in 2022 when there were 33 deals and $29.3bn in total volume.
The most recent credit card securitization this year priced on October 17 from Wells Fargo.