10/12/2026
Broader geopolitical and macroeconomic concerns have rumbled along in the background for much of 2026.
The war in Iran caused a brief blip back in March where the ABS markets stalled, but within weeks, primary issuance was able to shrug it off and continue printing record volumes at some of the tightest spreads in years.
I’m not sure whether market participants should be proud or dismayed that while Brent Crude has spent most of the year since then above $90bbl, European ABS just kept calm and carried on.
In government bonds, for a while, nothing really happened. Yes, yields were rising – about 40bps from January to May, but this was no global Liz Truss moment. For ABS, this was also being suggested as a potential reason why issuance would further grow. As one of the rare floating rate asset classes in the capital markets, ABS could be a useful little hedge against rising rates.
We got to the end of September with all of this pretty much holding true. Indeed, 2026 is still on course to be a record post-GFC year for ABS (the third year running that we can say that).
However, the rumbling in the background is getting louder. The idea that ABS might be the shelter from the storm is now seriously under threat.
In the last 3 months, 10 year government bond yields are up 61bps for the US, 45bps for the UK, 68bps for Italy and 96bps for France. With that much movement in government bonds, it then becomes very difficult to work out what price you should buy at in ABS.
Two offered trades priced last week: a Spanish consumer ABS from BBVA and a French STS Auto ABS from RCI Banque.
RCI Banque’s deal, the €769m Cars Alliance Auto Leases France V 2026-1, was in the market less than two weeks after Stellantis Bank’s Auto ABS French Leases trade, which priced its triple-A’s at 70bps over 1-month Euribor. That itself was a touch wider than expected versus the July Bumper FR which priced at 65bps.
But from the get go, it looked like low 70s was simply not in play for RCI Banque. They finished with the books 1.2x covered and managed only to get 80bps. So the French Auto market has widened out 15bps in roughly 3 months.
Of course, the protests and riots in France over the past week or two did RCI Banque no favours. The question in the coming weeks will be whether this is suggestive of a broader market slowdown or more French-specific. How will the more esoteric collateral fare too?
Perhaps for the first time since March, there are some real concerns in the European ABS market.
I mentioned it last week and the first ever Concept ABS Briefing event is now live. Spaces are really tight, so register your interest in attending by clicking here.
It's on November 5th, 8am at Sushi Samba in Heron Tower, just a stone's throw away from Liverpool St station. And I'll let you in on a little secret - the moderator for the panel is none other than yours truly. But don't let that put you off!
We've got some great speakers lined up from ARC Comply, CMS, Together Money and Natixis. And of course, there's plenty of time to catch up with colleagues over breakfast.
RCI Banque has returned with its Cars Alliance programme, its DIAC unit marketing a fourth French auto lease deal, a little over a year after its last French auto lease deal. Offering two tranches, the deal has contributed to a runrate of auto paper that has rarely been matched post-GFC.
Indeed, with >35 ex-CLO deals sold in both Euros & Sterling since the summer reopening, accounts have been offered an amount of paper that is unprecedented for the best part of 20 years. However, the wider bond markets are creaking and with so much supply, accounts are not to be taken for granted...click here to read the full overview on Concept ABS.
With placement hitting €91bn YTD and the last six weeks delivering no fewer than 37 ex-CLO new issues in Euros, post-GFC records are tumbling. Auto collateral is front and centre with eight Euro-denominated deals pricing (before this week) since the post-summer reopening. Indeed, total euro auto placement of E22.8bn in 2026 is bettered on a full-year basis by only 2025 with a whole quarter still to go this year.
Meanwhile, investors remain engaged but are becoming increasingly assertive: their bid remains reliable, but it can't be squeezed. Quite apart from record supply, the global bond sell-off, worsening middle east tensions (buttressing the price of oil and inflation), and riots in France mean that accounts need little encouragement to push back.
The leads started out with tame IPTs on a lumpy provisional pool of E1.1bn and with the originator reserving the right to retain a portion of Class A and B. 80a on the Class A's represented a 10bps pickup versus Stellantis' Auto ABS French Leases deal, which priced just a couple of weeks ago...click here to read the full Market Context on Concept ABS.
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