6/1/2026
Good morning, I hope you had a nice weekend. For me, I must be honest it was not. Absolutely gutted that Arsenal couldn’t get over the line in the Champions League on Saturday. But still a great season… and at least I have the World Cup to be heartbroken once more this summer.
Anyway, there is no time for me wallow in sorrow, for while my heart is cold, European ABS is on fire.
Four deals were priced this week (1 not offered), while there is a plethora of slightly funky ABS to feast on next week, including a first-time fully offered trade from credit card lender Vanquis and a prime Irish Auto ABS from Finance Ireland. Everyone has eyes on Barcelona, it seems, and will be rushing to be done by Friday.
Not so long ago, the market felt open only for select (mainly German) auto issuers, but it’s clear now that the bid is well and truly back for spicier paper - whether by jurisdiction, collateral type or issuer familiarity.
Perhaps nowhere was that more apparent than in the Portuguese consumer ABS from Banco Santander – the €484m Consumer Totta. IPTs were generous, sure, but they weren’t out of this world in offering about 10bps pickup versus recent comparables on the triple-A’s and 30-45bps in the mezz.
Yet before you knew it, books were multiple times oversubscribed across the stack – including 3.2x on the Class A’s and 7.4x on the Class B’s. Successive rounds of tightening following bumper demand culminated in record prints across the stack for the Totta shelf.
Similarly, Dutch equipment leasing company Beequip returned to the ABS market following their award-winning debut last year with Equipment Lease ABS, the €500m Hive 2026-1. Like Totta, they built momentum quickly and with strong demand and greater investor familiarity with the programme, they managed to print well inside the 2025 Hive alongside a last-minute upsize.
Both deals have likely benefited from their relative rarity value. Just €500m of Lease ABS had been placed all year, and Totta was the first Portuguese marketed deal of the year. It helps too that oil is back trading in the low-mid 90s, even though air strikes are continuing. For other, less established issuers looking for funding in a less established region or asset class, the last two weeks are sure to give them confidence.
But I wonder if ABS is now being used as a hedge against the threat of rising rates. There is not a lot of floating-rate paper going round in European capital markets these days, so this is likely part of the story.
European ABS is not immune to the fallout from the Iran war. If higher oil prices keep inflation sticky, consumers will feel it through energy bills, fuel costs and, eventually, tighter monetary conditions. That could put consumer credit under pressure, particularly if the Strait of Hormuz remains shut for longer than markets currently expect.
But in the short term, the structure matters. For investors playing in the triple-A to single-A part of the stack, the floating-rate nature of the bonds offers protection against duration risk, while credit enhancement should provide comfort that any deterioration in underlying consumer performance would take time to work its way up the capital structure.
So perhaps ABS is not just welcoming all comers because spreads look attractive. It may also be one of the few places in European credit where investors can add spread, keep duration low and still feel relatively protected if central banks are forced back into hawkish mode.
Banco Santander Totta has returned with another Portuguese consumer ABS from its Consumer Totta brand. The latest deal has priced barely seven months since it last approached accounts, the originator taking advantage of a conducive issuance backdrop. Recent deals, leaning on bumper coverage (especially lower down the ratings ladder) have confirmed that the bid is back – after a slight wobble towards the end of a busy Q1...click here to read the full overview on Concept ABS.
After a tumultuous few weeks at the tail end of Q1 (driven by supply and the Iran-Israel-US conflict), the ABS bid that characterized the start of 2026 has returned in earnest. While investors had been particularly hungry for the most liquid and vanilla of paper, it's clear that the bid is back for the less frequent originators and regions. Away from the dominating auto market, consumer ABS flew out of the blocks in Q1 smashing the post-GFC Q1 record with over €5bn placed. And after a slow start to Q2, issuance has risen above €4bn (including Totta) - the asset class well on course to set a new record for annual placement.
Nevertheless, this was the first Portuguese consumer trade since the October 2025 Totta. The leads would have been well aware that times of strife linger longer in the memory for the less established regions and had to tread respectfully. IPTs were conservative, offering as much as 8bps pickup versus the October Totta, and 10bps versus Santander's Italian consumer ABS Golden Bar in March on the Class A's at low-mid 80s... click here to read the full Market Context on Concept ABS.
That’s all from me this week. You are all free from my football musings now. I don’t think the stress of it will ever compel me to write it out of my system ever again (unless Arsenal begin a new 20-year wait for a title).
With Global ABS now firmly on the horizon, perhaps now is a good time to say that I’ll be doing two appearances on stage. First, a “Freshly Squeezed Live Podcast” with Heike Hoehl, ING’s Director of ABS Syndicate. I’m very excited for that one as Heike’s enthusiasm for ABS is well known to many of you.
I’m aware that it’s a busy time for bankers in particular, but if you have some keen young guns with 30 minutes to spare, I think hearing it from someone who’s been there, done it and got the T-shirt will be invaluable. 2pm in the Exhibit Hall on Tuesday 9th June.
Then on Wednesday, I’m doing the Researcher’s Roundtable at 4pm. We’ve got bank researchers from Citi and Rabobank, supported by data experts from European DataWarehouse and Moody’s Analytics.
Again, sure to be an interesting discussion about where the market is heading.
Have a great week, and see you in Barcelona!
Tom
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