4/20/2026
Financial markets do make me laugh sometimes. Just a few days ago, we’re worrying about whether this could be the beginning of World War 3. ABS has been naturally less volatile in this instance but still, deals have been pulled, retained, pre-placed or forced to cough up 10bps or so more than they would’ve expected two months ago (and it’s more like 30bps further down the stack).
But suddenly, Easter is over, a ceasefire is on the horizon and all is right with the world…Never mind that outlets like the BBC running stories about doomsday scenarios of energy shortages and rationing food for the nation. Everything will always eventually be okay, the markets cheer.
Five deals were marketing this week, and as the days went by they all picked up strong momentum, tightening like it was January 2026 all over again.
For none was it more true (or more impressive) than Mercedes’ €500m Silver Arrow 21. Quite simply, it was a fantastic performance. One that shows the value of working with an excellent syndicate desk; a tactical masterclass worthy of footballing geniuses like Pep Guardiola, who looks set to break my heart once again.
So why was it so brilliant? I will explain by giving you a window into the work behind Concept ABS.
Concept ABS is a bit like a DIY tool for ABS valuations or trading. With all the historical pricing data you could ever wish for, you can use it to see the future. And when the accompanying market commentary is written, that is effectively what CEO Matt De Bergolis (himself an ex-trader) and the team do.
At the start of the week, we try to set a simple line in the sand: wide of it is not great, inside it a tad is good, on the line is fine. For Silver Arrow 21, the first place to look is Silver Arrow 20 – which was priced back in October at 43bps over 1-month Euribor. But the world is a vastly different place now as we know, and since the war in Iran broke out there hasn’t been any other benchmark German auto paper, meaning there was no real direct comparison to make.
We did know that triple-A paper had roughly widened 5-10bps though. And there was a post-Iran deal from the Red & Black Germany shelf, which in good times can price just a couple of basis points wide of the benchmarks.
In March, it was priced at 52bps – 4bps wide of its September predecessor, Red & Black Germany 13, from last September. As a German benchmark, Silver Arrow is more liquid so maybe they wouldn’t cough up as much. But triple-A coverage has really struggled of late. So all in, if Mercedes’ leads could price under 50bps and cough up just 6bps (or less) against the October Silver Arrow, you would have to consider that a success. Any wider and you might worry for the market as a whole. This was our imaginary line in the sand.
The Mercedes leads’, led by SocGen as arranger and MUFG and RBC joining as lead managers, had a trick up their sleeve, however.
Upon hitting screens, the leads said very clearly that there would be no upsize. This was a €500m deal and that was that. In essence, it was a strongly worded letter to investors: “Don’t get cute. There’s no bargain to be had here, for this is Silver Arrow. Put your best foot forward or else.”
Nevertheless, IPTs started off as expected at 50bps – a 7bps pickup versus the October Silver Arrow. If the leads could tighten 1-2bps from there, that would be a good result following a few days of hard graft. The "no upsize" tactic came to fruition at the first book update and guidance.
Books were covered 2.3x at IPTs, allowing for a screeching tightening down to 45bps. For context, the French auto Titrisocram just two weeks earlier could only get books 1.3x covered, such was the difficulty of finding triple-A buyers.
Turning the screw on investors so hard was surprising to say the least. But it didn’t stop the demand. A second update had books 2.7x covered and meant revised guidance of between 42-43bps. While everyone else was planning for 5bps of widening, Silver Arrow were looking to improve on their last print!
And so it was, final terms at 42bps meant it was 1bps tighter than October’s €700m Silver Arrow 20. The Concept ABS line in the sand had been left for dead. Hopefully, it is a sign for all future comers that the market is still there, if you know how to play your cards.
Mercedez-Benz Bank, one of the benchmark German auto issuers, has returned to the ABS market for the first time since October 2025 and with market conditions vastly different following the US & Israel's war with Iran. However, with a resolution to the conflict looking closer than at any point in the last 6 weeks and following the Easter break, Silver Arrow leads were looking to lean on the programme's well-established reputation... Click here to read the full overview on Concept ABS
It has been a tumultuous few weeks in financial markets, one that the ABS market has not been immune from. Indeed, compared to the halcyon earlier weeks of 2026, issuers were forced to cough up roughly 10bps at the triple-A level in the run-up to Easter on the two most active ex-CLO asset classes: consumer and auto collateral. But with a resolution to the Iran-US conflict now on the horizon, the hope is that the collective sigh of relief breathes new life into a market that was beginning to stutter. The reasons for the stutter remain somewhat more mundane. Q1 placement hit over E16bn ex-CLO – smashing the previous post-GFC record of E11bn set in 2018 in the process, while euro denominated assets raced past E6bn for the first time in Q1 post-GFC too. A little pause therefore, was justified.
The question for Mercedes was whether that weariness would continue post the Easter break. As a result, the leads had to be more than a little careful and box clever. From the start of marketing, Mercedes insisted that Silver Arrow would remain at E500m offered. With no upsize, any weary investors would have to put their best bids forward, which allowed the leads to manufacture some early momentum... Click here to read the full Market Context on Concept ABS
There’s just one trade in the pipeline this morning, coming from the Swiss lender Multilease AG with just its second euro-denominated auto ABS. Expect to see a few more begin marketing in the next few days.
As for me, despite my devastation at Arsenal’s latest defeat to Manchester City, I wake up this morning optimistic (or in denial). I feel it in my bones. This is our time.
And finally, my dog Chewie finally met his match this weekend when a bunch of 5-year old boys saw him in the local park’s pavilion bar and asked if they could chase him. Chase him they did. For well over an hour. I do not think he has ever been so exhausted.
Have a great week,
Tom
© 2026 ARC Risk Models Limited
