ING leads pack as Europe roars into action

Forget Gold. Chuck out your silver. Delete your bitcoin. European ABS is the new safe-haven asset.

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Okay perhaps that is somewhat hyperbolic, but it really was a brilliant week in euro ABS. It was led by none other than ING, who priced its first Green Lion prime RMBS since June 2024, known as Green Lion 2026-1.

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Using what must now be considered “traditional” arranger tactics, the leads lured investors in by casting a wide net at an unremarkable spread, which offered as much as 50bps over 3-month Euribor for the single offered €750m AAA tranche. Investors chomped onto the bait and refused to let go, even as the spread moved to 45bps. In fact, all it seemed to do was attract more buyers.

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Coverage grew to a whopping 3x (or €2.25bn books) and the spread was set at 43bps. An upsize to €1bn was the obvious next step, but it still meant that €1.6bn of demand went unfulfilled.

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At just 1bps wider than last February’s Green Storm from Obvion, it’s a stellar result for ING, who placed over €400m than their Dutch colleagues. And that is in spite of a fair bit of yo-yoing in commodities like Silver and Gold, and parts of the stock market – particularly software.

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So, why so much engagement?

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Well for starters, I think we can rule out the green part of the lion having much impact.

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Obviously, it’s great to see green finance in ABS, but hopes of a long-awaited “greenium” seem to have died from the moment they met with reality. It’s much more likely that investors were keen to get their hands on prime Dutch mortgage exposure, which has become a rare sight in recent years.

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We should remember too that there really isn’t much in the way of euros when it comes to prime mortgages, such is the vice-like grip that Covered Bonds have on the Continent.

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The same argument could be made for Dutch BTL mortgages, after Jubilee Place 9 entered into a rather crowded market but with no shortage of love. Domivest had of course priced its own Dutch BTL trade last week, and with Green Lion out in the market, it would have been understandable if the leads were a tad nervous. And, unlike ING, it was only last September when the medley of Dutch lenders issued Jubilee Place 8.

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But sentiment was overwhelmingly positive. The AAAs were only 2bps wide of the prior week’s Domi, and there was still space to chuck in a €67m upsize before the close too.

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Last but not least in euros, we saw what one could call an opportunistic reoffer from Italian Bank, Banca del Mezzogiorno – MedioCredito Centrale, who reoffered the top AAA tranche of its December 2025 prime Italian RMBS, MCC Group RMBS 2025, which was fully retained initially.

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It’s not quite the emergence of Nationwide’s “stock and drop” trade finally catching on, but perhaps not too far off?

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As for this week, things look a little light in my opinion with just one sterling Auto, in addition to a Spanish consumer ABS and a French RMBS. It would not at all be a surprise to see a number of announcements, particularly in euros, on Monday and Tuesday. The market is well and truly open, so there's no reason to delay.

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One final addition of note is that the UK CMBS from Morgan Stanley, the £285.057m Aesir ELoC 41 was priced after some very late negotiations brought it a couple of bps tighter on the AAAs and to the tight-end of Guidance further down the stack.

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Final Word

That’s all from me this week. The ARC team is off to a lovely Hampshire hotel for our annual strategic offsite from this afternoon. It looks as though it was used as a filming location for a Jane Austen novel.

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Meanwhile, I revert back to the golden rule of football: Never trust those you hate most to do you a favour. My mother is a Scouser (person from Liverpool), so I always expected to be left empty handed. To any fellow Arsenal fans reading, have no fear. We’ll be fine.

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And for those who read just to hear how Chewie’s getting on, there was no muddy adventures but he did manage to tucker himself out at the pub.

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Have a great week,

Tom