The ABS market has had a mixed recovery following the outbreak of the war in Iran, however prime euro ABS products have been performing even better than the record tights of January and February.
Those issuers offering deals backed by the highest quality collateral available on the market should take advantage of a market where demand for the safest ABS deals is stronger than for the rest.
Mercedes-Benz and Volkswagen proved demand for prime German auto collateral is at a recent peak, with both issuers printing deals at 42bp over one month Euribor for their Silver Arrow and VCL shelves, the tightest prints for these programmes since the spring of 2024, according to GlobalCapital’s Asset Backed Monitor.
ASR then confirmed that demand was also strong for Dutch prime RMBS, pricing its deal at 42bp over three month Euribor only a couple weeks ago. This was the tightest print for a Dutch prime deal since February 2025.
This is in stark contrast to lower quality asset classes like UK buy-to-let RMBS, where it looks like demand has not returned to its peak.
TwentyFour and Paratus AMC priced the two most recent deals at 84bp and 86bp over Sonia. TwentyFour was able to price the same programme at just 73bp only a year ago.
While these issuers could perhaps benefit from giving ABS investors some time over the summer to regain their appetite as supply shuts, the opposite is true for prime euro issuers.
The calculus for prime euro issuers is simple: demand is incredibly strong for these assets, the market will likely only be open for about two more weeks before it slows for the summer. These issuers should lock in their funding now rather than risk any geopolitical uncertainty that could emerge during the summer and disrupt the ABS market.