October Consumer ABS Market Update

Monthly Commentary

November 04, 2016


  • October saw the heaviest issuance month of the year with nearly $25B in deals pricing. Autos accounted for over 50% of issuance and recorded the highest issuance month of the year with nearly $13B. Year-to-date issuance stands at $169B, which is slightly higher than last year’s pace
  • Highlights:
    • Sprint launched an inaugural deal backed by wireless spectrum. The $3.5B deal, which can grow to $7B, was priced to yield 3.375% for a 3yr WAL bond. It is non-callable for 4yrs and pays interest-only for the 1st year and amortizes by 25% a year thereafter with an anticipated repayment date in 2021. The spectrum collateral includes spectrum in the 2.5 GHz and 1.9 GHz band
    • CommonBond, an issuer of refinanced student loans, issued its second deal of the year. The $168mm transaction priced with the senior 3.9yr bond pricing at 155/n while the subordinate 4.4yr bond pricing at 280/n
    • JG Wentworth brought a $117mm deal to the market. This was the first deal in nearly a year for the issuer. The 10.1yr senior bond priced at 185/n, yielding 3.4%. The collateral in the transaction consists of structured settlements
    • Lendmark, an originator of unsecured consumer loans, launched a $250mm deal with the 2.5yr senior bond pricing at 215/n to yield 3.3%. The collateral is composed of loans with a 620 average FICO score and 26% weighted average coupon
    • Vertical Bridge is a private cell tower company. The firm issued a $196mm deal, the second deal of the year. The 4.9yr senior bond was issued to a yield of 5.25%, approximately 400/n
    • Apollo Aviation launched a $640mm aircraft deal. The 4.1yr senior bond priced at 300/n and the subordinate bond at 470/n. The deal is backed by leases made on 35 aircrafts with an average age of 12yrs


  • Secondary volume totaled over 5B with cards and autos accounting for about 65%
  • Despite the heavy primary issuance month, spreads were 5-10 bps tighter for short spread duration assets such as prime autos and FFELP student loans

Market / Consumer News

  • The Department of Education reached a settlement with DeVry University, a for-profit school, regarding job placement claims. The settlement allows DeVry to continue to participate in the federal student aid programs on a provisional basis while also calling for the university to cease marketing certain claims about job placement
  • CircleBack Lending, a market place lender that originated unsecured consumer loans, announced that it has stopped originating new loans
  • Goldman Sachs opened its new online lending platform and named it Marcus, after the name of its founder. The platform will allow for unsecured loans of up to $30,000 with a focus on borrowers with a 660 or higher FICO score
  • The CFPB Student Loan Ombudsman released its annual report, recommending that the treatment of delinquent and defaulted student loan borrowers be reassessed. Specifically, the report notes the difficulty borrowers have enrolling into an income-driven repayment program and recommends streamlining the process and strengthening the communication during the phase when a borrower is transitioning from rehabilitating to enrolling into an income-driven plan
  • Volkswagen received approval for a $14.7B settlement. The company, which had been found to use devices to defeat emissions testing, will now buy back, terminate leases, or repair affected vehicles



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