And so it begins

And so it begins. After a record breaking H1 and a summer ofrelative quiet amidst the seemingly unending European heatwaves, the mad dashto Christmas should start this week.

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SocGen’s Red & Black Auto Italy 4 fired the starting gunlast week and released IPTs this morning. It is slated to price this week, butour expectation is that a number of others will begin hit screens in the comingdays, although they may price after the bank holiday. Indeed, the more familiarGerman edition of Red & Black has also just hit screens. Signs of a clearstrategic decision by SocGen perhaps of getting into the market early?

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So what to expect? The classic movements at the start ofSeptember are for lots and lots of Auto ABS, particularly from the bellwetherissuers like Volkswagen, Mercedes and BMW. The growth of Consumer ABS in recentyears, led by the likes of Santander and BBVA, means we would expect a lot ofearly issuance to come from there too.

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We’ve heard that there should be at least one other DataCenter deal as well, while there are few equipment/leasing style tradesexpected too.

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In sterling, a market more dominated by RMBS issuance, wetend to see a few prime trades and BTL transactions slightly later on inOctober/November.

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Despite no official end to the US-Iran war, broader marketsare significantly calmer than they were in the Spring with the VIX back downtowards its normal level of 15 – having been in the high 30’s when the warbegan.

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So with broader macro and geopolitical forces not having alarge impact right now, the ABS market looks pretty. The main challenge overthe coming months will be managing investor appetite and the time they may needto look at new deals as they come in.

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Expect spreads to stay roughly in line with the last 18months, perhaps early September will see a small amount of triple-A tightening,with things edging out a bit wider as winter draws in.