June 2017 Consumer ABS Market Update

Monthly Commentary

July 06, 2017


  • Primary issuance in June totaled close to $20B, bringing the YTD volume to $125B. YTD volume is over 25% higher than 2016’s YTD volume.
  • Specialized ABS dominated the issuance calendar, accounting for 45% of volume. Leading the way were unsecured consumer loans with $3.6B and whole business with $2.1B. Issuance of containers also saw an increase with over $1B pricing.
    A few highlights include:
    • LendingClub issued its first sponsored transaction with a $279mm deal. The single A rated 0.4yr tranche priced at 110/e. The collateral in the deal consists of unsecured, subprime consumer loans.
    • Springleaf launched its first deal of the year – a $652mm transaction. The company, an originator of mostly unsecured consumer loans through retail branch locations, priced the AA 3.5yr senior at 100/n, yielding 2.7%.
    • Upstart, a marketplace lender of unsecured consumer loans, issued its first deal. The $163mm deal priced an A rated 0.9yr senior at 125/e and a BB rated 3yr subordinate at 475/n, yielding 2.65% and 6.4% respectively.
    • Jimmy John’s, the sandwich restaurant chain, brought to market an $800mm deal. The 4yr BBB tranche priced at 183/n, yielding 3.625%. The deal is backed by franchise royalty income.
    • Textainer priced their second deal of the year. The $500mm transaction included a 5yr A rated senior tranche that priced at 174/n to yield 3.55%. The deal is collateralized with shipping containers.


  • Volume in secondary trading totaled over $6B with cards and autos accounting for over 60% of volume, while student loans made up over 20%. Spreads for cards and autos were generally 1-2bps weaker and were flat for highly rated FFELP student loans.
  • Trading activity for rental car ABS had a noticeable increase in June, particularly Hertz. While the rental car industry continued to face challenges, spreads for rental car ABS tightened 5-10bps following Hertz’s issuance of $1B in second-lien secured notes.
  • Within the container ABS market, improving fundamentals led to a resurgence in new issuance, which in turn led to an increase in secondary trading. Spreads tightened 10-15bps during the month.

Market/Consumer News

  • Total consumer credit rose at an annualized rate of 2.6%, the smallest increase in nearly six years according to a report by the Federal Reserve. Nonrevolving credit, which accounts for nearly 75% of total consumer credit, grew at annualized rate of 2.9%, the slowest pace since 2011.


Source: BofA Merrill Lynch Global Research


Media Attachments

This material is for general information purposes only and does not constitute an offer to sell, or a solicitation of an offer to buy, any security. TCW, its officers, directors, employees or clients may have positions in securities or investments mentioned in this publication, which positions may change at any time, without notice. While the information and statistical data contained herein are based on sources believed to be reliable, we do not represent that it is accurate and should not be relied on as such or be the basis for an investment decision. The information contained herein may include preliminary information and/or "forward-looking statements." Due to numerous factors, actual events may differ substantially from those presented. TCW assumes no duty to update any forward-looking statements or opinions in this document. Any opinions expressed herein are current only as of the time made and are subject to change without notice. Past performance is no guarantee of future results. © 2019 TCW