August 2017 Consumer ABS Update

Monthly Commentary

August 31, 2017

New Issue

  • ABS issuance totaled $19.75bn for the month of August, bringing YTD issuance to $160bn (33% higher than YTD 2016).
  • The majority of August issuance was from the Credit Card and Auto sectors, with Credit Card ABS seeing a 60% increase in issuance year over year.
  • Issues of note that priced during the month include:
    • A $350mm insurance premium finance deal by IPFS. The three-year AAA rated notes priced at 55/n and the three year single A notes at 90/n.
    • A $144mm structured settlements deal by J.G. Wentworth. The 12-year AAA rated notes priced at 125/n, 15 bps tighter than their 2017-1 deal.
    • Two consumer loan deals, one by Prosper and one by One Main, priced:
      • Prosper issued a $500mm marketplace lending deal with the 0.8 year A rated note at 100/e and the 2.8 year B+ rated note at 375/n.
      • One Main priced a $947mm consumer loan deal (upsized from $600mm) with the 2.7 year AA rated notes pricing at 80/n and the 4.4 year BB notes at 285/n.
    • Diarough Group priced a transaction backed by its inventory of rough and polished diamonds. The $155mm deal priced its four-year and seven-year single A rated notes at 5% (~320/n) and 6% (~397/n).
    • Sky Aviation priced a $780mm deal backed by leases on 21 aircraft with a weighted average age of 3.4 years. The 4.6 year single A rated notes priced at 4% (~220/n).
    • Triton priced a $450mm Container ABS deal with the 5.1-year single A class pricing at 3.65% (~178/n). The offering was upsized from $350mm and oversubscribed at pricing.
    • Hertz priced $145mm of subordinate bonds (originally retained by the Issuer) for two of its 2015 deals and four of its 2016 deals. All bonds were rated BB and priced at a spread of +515. WALs ranged from one to four years.


  • Although the new issue market was busy over the month, secondary volume was robust with spreads tightening across most sectors.
  • Despite the continued negative auto headlines, AAA and BBB subprime auto ABS tightened 5 bps and 15 bps respectively over the month. Unsecured consumer loan ABS also tightened 5-10 bps.
  • There was a $730mm FFELP list that traded well with three year WAL bonds trading in the m30s dm, 10 bps tighter month over month.

Consumer News

  • CPI data for July showed a 1.1% decline since July 2016 for new cars and a 4.1% decline year over year for used cars and trucks. This is the 17th consecutive month that year-over-year CPI has declined for used vehicles.
  • Air Berlin filed for bankruptcy protection on August 15th. According to Wells Fargo, Air Berlin has 72 planes, almost all of which are leased, with 12 post-crisis Aircraft ABS deals having exposure to the airline.


Source: BofA Merrill Lynch Global Research


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