1/12/2026
Thanks to Storm Goretti, 100mph winds hit parts of the UK and France along with heavy snow and freezing temperatures, which also swept across much of mainland Europe. But it seems that for now, no geopolitical chills from Greenland have hit European financial markets.
Last week, I wrote that it would be surprising to see any flinching in ABS or broader markets as a result of the US’ capture of the (now former) Venezuelan President Nicolás Maduro.
However, the same surely can’t be said if an actual or attempted US takeover of Greenland unfolded. That, in so many ways, would be an entirely different kettle of (arctic) fish.
What was less clear at the beginning of last week, was whether the statements by US and European officials would have any immediate effect on financial markets. So far, it seems the answer is no.
Indeed, last week saw the sterling ABS market come to life in 2026 with three trades hitting screens from Vida Bank, Toyota, and Blackstone/Mileway UK. In addition, Santander's Prime RMBS shelf, Holmes Master Issuer began marketing this morning.
Meanwhile in euros, we understand that deals are progressing as normal from Monday. One would expect your classic re-openers to start off proceedings – think that means plenty of prime Auto ABS coming soon - and indeed VCL 47 has just hit screens.
All four UK trades are slated to price next week, and if we add a couple of euro deals to that by Friday, I think we can safely say that European ABS is back up and running.
There are probably two key things to look out for in the coming weeks: spreads and underwriting standards.
To best gauge spreads, I think market participants will be trying to compare the coming deal flow with September/early October 2025 trades. As year-end drew closer, there was a touch of widening but the trades were often a bit more esoteric, or could be explained away by investors meeting their allocations for the year after such a wealth of supply up until October.
Now though, investors should have plenty of cash to put to work, so that’s one mitigating factor out the window. Plus, as was touched on, we’ll be seeing the classic roster of names come through over the next few weeks, which is easier to compare.
So, when IPTs and guidance start to trickle in, we’ll be getting a good sense of whether the aforementioned heightened geopolitical volatility is forcing issuers to pay up.
Over the years writing on ABS, there’s a perennial question of whether an issuer should be aggressive and come to market ASAP or wait for a clearer lay of the land but risk getting caught in the crowd. I reckon that since the war in Ukraine began in early 2022, the answer nine times out of ten has been that the early bird catches the worm.
At this moment though, I would feel instinctively more comfortable at the thought of waiting until early February in the hope that the dust has settled. But as a friend said to me this morning, in markets there’s always noise. If you wait until there’s no bad headlines in the news, you’ll never get anything done.
Investors will have plenty of paper to put to use this January. We know there’s huge capacity to take on ABS now, and the technicals will just be too strong to worry about what may or may not happen in global affairs.
Of course, this is easy to say from my vantage point with no skin in the game – and potentially in a few weeks, we shall see exactly why I’m sat here writing not running a trade!
Secondly, and not unrelated, is investor underwriting standards.
Last year, we saw huge spread compression across asset classes. By that I mean that while spreads on things like Prime German Auto or Prime UK RMBS didn’t really move – benchmark German Auto AAAs floated from46bps in January 2024 to 49bps in January 2025 and 43bps in October 2025 - spreads for more esoteric products came in significantly.
I took a look at 2024 through to the end of 2025, and something with a slightly more esoteric flavour like Spanish and Italian Consumer ABS came in by about 13bps on the seniors.
Meanwhile on the mezz, if we take Younited Credit’s Youni Italy series, the 2024-1 edition priced its single-As at 170bps. Fast forward to November 25, and the 2025-2 edition landed at 115bps.
So, not only have spreads compressed in terms of prime versus esoterics, the credit curve has flattened significantly too.
The question for this year is whether investors will be as willing to bend on the funkier side of the market. Yes, there looks to be more geopolitical uncertainty, but more importantly to investors, my hunch is that they could be getting increasingly cautious – and increasingly come to believe that we are approaching the end of the current credit cycle.
From the outside, the easiest way to watch that is to see how prime spreads perform versus esoterics, so keep your eyes peeled!
As for me, well, I’m beginning to think there may be a problem with my knives. Last week’s readers will know that with my new set of sparkling, sharp, Japanese knives, I managed to partially cut off the top of my thumb while cooking. Think the Nearly Headless Nick of the thumb world, and you get the picture.
This past Friday however, my knife slipped while I was cutting some carrots, removing a solid chunk off the top of my middle finger and exposing the dermis.
So, naturally, the only conclusion I can come to is that the knives my father bought me for Christmas are faulty. Will be discussing a replacement issue with him this week.
Wishing you (and your digits) a great week!
Tom
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