2/2/2026
Many market participants (and dare I say, my readers) breathed a sigh of relief this weekend, as their month-long alcohol detox came to an end.
The same cannot be said for me, but I have still managed to make over 3kg of progress in my “abs by GABS” challenge.
It was also a rather dry January for euro issuers, not including Volkswagen. Now though, the flow is returning, led once more by an Auto ABS bellwether issuer – BMW.
Any notion that euro investors where still digesting a record-breaking 2025 were firmly put to bed this week with BMW’s €900m Bavarian Sky German Auto Leases 10.
The German carmaker began with a softly, softly approach by offering up to 6bps versus Volkswagen’s VCL 47, and just €450m up for grabs. The tactics worked perfectly. Coverage rose to 2.6x on single offered tranche, giving BMW space to tighten and upsize to €900m.
By eventually landing on 42bps over 3-month Euribor, BMW became the first Auto issuer to hit 42bps for almost 2 years. Drinks on the house for the leads, surely?
Meanwhile, Domivest returned to market for the first time since April with a €530m Dutch BTL RMBS, Domi 2026-1.
It feels like a bit of a statement trade for Dutch RMBS. Domivest leaned on its track record of zero losses, ultra-low arrears and a loyal investor base, and investors responded by swallowing the largest fully marketed Domi deal since 2017.
The impressive part wasn’t just the pricing, but the timing: this landed amid geopolitical noise and with rival Dutch supply circling, yet still pulled €1bn+ of demand. If 2025 was about excess, Domi 2026-1 shows 2026 may be about selective conviction. For seasoned issuers with clean stories, the bid is very much awake, it’s just sharper, more discriminating, and ready to reward familiarity done well.
Unsurprisingly, the familiar faces of the EU market are now lining up to join the party, including with a roar not heard since 2024 from ING’s Green Lion program, another Dutch RMBS after a lean 2025 in that sector. Expect a busy week.
As for sterling, things were understandably quieter last week after a flying start to the year where €3.6bn (equivalent) had already been placed across six trades. Nevertheless, it saw the return of another specialist mortgage lender – with Pepper Money’s latest from the Polaris shelf.
Perhaps the strong start to the year, in addition to this being the fourth Polaris in 12 months, made Pepper slightly uncomfortable as they hit screens – offering just £291m across four tranches, and at a rather tempting price as well.
Indeed, the AAA IPTs at low 80s offered 4-6bps more than the latest BTL RMBS from LendInvest, while 25-50bps was on offer further down the stack. Or maybe, the plan played out perfectly.
Demand was super-strong throughout the cap stack. Coverage on classes A-D was 4.3x, 9.6x, 7.8x and 7.2x, respectively. Successive rounds of tightening duly followed. The AAAs finished about 9bps tighter, B and C were about 30bps tighter and the Class D’s were about 40bps tighter. Overall, it was tighter on every tranche versus the recent Pierpoint trade.
Sterling buyers are hungry and they are milers away from being anywhere near full.
That’s all from me this week. I begin my week after a very enjoyable weekend where I think even the most pessimistic of Arsenal fans may now start to believe this is their year.
A good sporting weekend was made even better by the news that my middle brother got engaged to his childhood sweetheart. What she sees in him, I’ll never know. It now puts unhealthy pressure on me to sort out my own wedding.
Lastly, Chewie went on a playdate to Hascombe Hill in Surrey on Saturday with a Jack Russell called Albert. Albert was not a huge fan of muddy water. The same cannot be said for Chewie. See below.
Have a great week,
Tom
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