10/19/2026
Good afternoon. It’s getting harder and harder to price deals in this market. There are an awful lot of broadly negative sentiments in the macro and geopolitical news, but ultimately, this looks like investors just need a breather.
However, it is worth considering just how bad that macro noise is.
The UK 10-year Gilt is hovering around 5.0-5.5%. Last time it was there was August 2007, just as the first bank runs in the GFC were beginning. Northern Rock started making headlines a month later. The same is true for the US 10-year, now at 5%. The German 10-year is not quite as bad at 3.48%, but still at its worst since 2011.
Meanwhile, in the world of AI stocks, Coreweave’s decline continues. It’s 47% down on the last 6 months. The IMF has also warned about the broad global effects of a US-based AI market correction.
And then there’s oil prices. Brent Crude has spent every day in October over $100bbl. It’s barely been under $80bbl for three months as Saudi Arabia deals with Houthi attacks, the Iran war is ongoing, and the Ukraine war is making headlines again.
While all of this is worrying, none of it is particularly new.
What has changed recently is how much supply accounts have had to absorb since the end of August. In October alone, over €7bn (equivalent) has been placed with investors, excluding CLOs, while the Q3 total across euros and sterling of over €44bn is the busiest since the GFC.
In truth, the run had to end somewhere and the market’s been brought back down to earth with quite the bump.
Of the seven deals that were priced this week, four were only 1.0x covered on the triple-A’s. None managed more than 1.3x coverage, and in total, unfulfilled demand was around €191m.
Stellantis’ latest Italian Auto from its Stella shelf had a particularly rough ride, finishing with the Class A’s 15bps wide of recent comps and the mezzanine notes ranging from 46-65bps wide.
The struggle across the board on the Class A’s suggests this was less about any particular deal giving investors pause for thought and more about the fact that market conditions have just changed.
In all likelihood, accounts are just stuffed. Perhaps the real question is whether the spread widening will endure.
Typically, October is a time for less liquid, more esoteric transactions and spread widening is somewhat inevitable. But there have been some eye-opening, less than positive executions of late, suggesting that maybe the market may be drifting 10bps wide of mid 2026 tights.
Many market participants will be thinking give it a few weeks or wait until January, and everything will be fine. US midterm elections are in November, further rate hikes are also in sight before the end of the year across the world. There’s a lot of potential volatility out there, but after a break we should see more of the true nature of things.
…Not that we’ll get it with six deals in the market this week!
Specialist lender LiveMore has brought its third UK owner occupied rmbs. Offering a full capital structure, Exmoor Funding 2026-1 is the securitisation of Later Life Mortgages originated by LiveMore Capital Limited - the non-bank lender targeting borrowers aged 40 and over.
With 2026 supply of UK collateral certain to set a post-GFC record while wider bond market turbulence and ratcheting middle east tensions provide unwanted – not to mention negative – background music – investors can't be taken for granted. The market isn't quite as strong as it was earlier in the year...click here to read the full overview on Concept ABS.
With c.£34bn sold in 2026 YTD, the sterling ABS primary market has already surged past 2025's full year placement of £25bn and has broken 2024's post GFC record of £33.6bn with over 2 months to spare. Indeed, Q3's placement of c.£12bn hasn't been bested in nearly 20 years. No fewer than 22 transactions featuring UK collateral priced in the last month (a run rate not matched since the halcyon pre-financial crisis days).
Facing so much paper, investors are still picking up the phone. However, they are significantly more price sensitive than in H1 of this year. With so much to choose from, investors have become more assertive. Recent rmbs deals have boasted strong coverage across the stack – below triple-A – but at pricing levels that are not quite the tightest seen this year. As for triple-A tranches, momentum is tougher to generate than earlier in the year. Furthermore, with the middle east and Ukraine conflicts threatening to escalate and global bond weakness, accounts need little encouragement to push back.
While LiveMore's Exmoor shelf operates in a class of its own as an equity-release adjacent prime rmbs, IPTs made it clear that they were not immune from the broader widening in the market with the Class A's at mid 90's representing around 20bps pickup versus the 2025 Exmoor deal last July...click here to read the full Market Context on Concept ABS.
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