3/16/2026
War does funny things to writers. Some of the greatest literature ever written details its horrors, from Sun Tzu to Tolstoy to Remarque to Heller to Solzhenitsyn.
And journalists are no different. I recall my lecturer, who had stints in warzones while working as a reporter for Reuters saying that for many, including herself, entering conflict zones while thousands try to flee could fast become an addiction. Indeed, there are many cases in recent years of journalists desperate to ensure the camera’s still rolling as they came under fire in Ukraine and beyond.
Similarly, for us journalists not brave (or mad) enough to be in the thick of it, conflict is always good copy. It’s macabre but unfortunately, war, just like a good scandal, sells.
This is especially true for financial media. Sure, securitization and corporate bonds and stock markets and energy prices can be interesting. But it doesn’t exactly wow the room at dinner tables. Trust me, too many times have I seen the eyes glaze over when the words “structured finance” are uttered.
But war causing oil prices to swing wildly? Now you’ve got a story!
However, the problem is it’s not always accurate. Of course, investors and bankers alike will have eyes on the conflict in Iran – even in the insulated world of European ABS. But the truth to understanding this market (and most others) is found much closer to home.
As the seven deals priced this week, it was clear the bid was not quite as strong as it had been. All of them pricing a touch of wide of recent comparators and surely internal expectations from barely more than a couple of weeks ago. On triple-As in particular, it looked like a real slog. Suddenly investors were becoming much more discerning.
Is Iran a factor? Yes, obviously. Is it the factor? Not quite. There are many unknowns about the future – the war could see oil prices spike above $150 or even $200 a barrel. But that hasn’t happened yet, and so far, Iran is something to keep an eye on… and potentially something useful to blame.
Closer to home though, there are bigger factors at play. I suppose one can only apologise that they are not linked to dramatic statements by world leaders and missiles flying through the sky.
The most boring, but possibly most accurate reason for the softness we’ve started to see in European ABS is technical. Last year was a record year for supply, and for euros in particular with €108bn placed with investors.
The two standout asset classes, Auto and Consumer ABS, which have dominated euro supply in 2026 as well, had record issuance of €26bn and €14bn, respectively. Quite simply, investors have had plenty of paper and they know plenty more is on the way.
When you consider all that and chuck in considerations around oil prices, inflation and interest rates thanks to the conflict in Iran, it means investors can afford to be hesitant when leads try to grind accounts tighter.
To put it into context, Auxmoney’s Fortuna Consumer Loan 2022-1 from May 2022 and Santander Consumer’s SC Germany 2022-1 both priced their single-A tranche at 375bps over 3-month Euribor (influenced no doubt by the knock-on effects of the Ukraine war). By late-2025 those same deals priced in the region of 115bps, even though the WAL was slightly longer.
So, to see this week’s Fortuna Consumer Loan 2026-1 price its single-A at 130bps, 15bps wide of the most recent comparator, should really not be seen as a reason for pearl-clutching.
As the graph below shows, the market has screamed tighter over the past 18 months, and a little bit of softening is no great cause for concern.
Related to the market becoming a tad more cautious, it was noticeable how building momentum in books was also much more difficult. Auxmoney's Fortuna triple-A tranche had €32m of surplus demand at final guidance, while almost exactly a month ago, BBVA's Spanish Consumer ABS had surplus demand at final guidance of €720m. For all the reasons explained above this is to be expected. But it does raise an interesting question about arranger strategy going forward.
The vogue tactic since late 2024 has been to offer seriously tempting IPTs to get your books handsomely oversubscribed in the expectation that you create unstoppable momentum to end up pricing at record tights. It has been a resounding success, but it’s worth remembering that a few years ago that sort of behaviour could actually infuriate your investors.
While maybe it’s not a faux pas anymore, the tactic depends on being confident in the ability to build momentum. It is quite the challenge to tighten the triple-As by 10bps if you’re barely more than 1x covered, for example.
So, something to watch out for – will we see, perhaps paradoxically, that leads go for slightly more aggressive IPTs in the knowledge that they will have less room to scream tighter later on?
That’s all from me this week. I have had a very, very strong weekend – but I’ve developed some very strong superstitions of late, so I shall not name my beloved football club or discuss their chances of glory.
Aside from that, I have finally set up my home office/cabin. Painted it white and all of a sudden it looks like a nice place to be and work, just in time for the warmer weather.
Worryingly however, my 92-year-old Grandmother is said to be exploring assisted living arrangements… about 500 yards from my house.
Have a great week,
Tom
© 2026 ARC Risk Models Limited
