Rare trades come to the party as Europe finally looks to slow down

Good morning, hope you had a nice weekend. Alas, there is noUK bank holiday today thanks to the last few flickers of brilliance from LionelMessi as his own personal World Cup history surely comes to an end.

Speaking of the dying of the light, it seems we may only have a few sparks of activity left in European ABS after an utterly breathless first half of the year. There are just three trades in the visible pipelinefor this week, which should be the first of five weeks at a more pedestrian pace.

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Last week however, continued the strong pace we’ve seen throughout the whole year, except this time with a slightly more esoteric flavour to proceedings.

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That was led by a first offered Belgian RMBS since 2015 from Creafin, one of the country’s leading non-bank lenders. The eponymous prime RMBS, Creafin RMBS BE 2026-1, was naturally then a pure play in price discovery. Strong demand was present throughout the offered tranches, allowing Creafin to fashion a last minute upsize and finish just 10bps wide of the most recent French Prime RMBS from Carnoon Bay Capital on the triple-As.

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We also saw a very small Portuguese consumer ABS from WiZink,in what appeared to be a mainly pre-placed/privately marketed transaction. The total size was €127.8m, but €96m was pre-placed. The remaining mezz tranches were offered but there was no protracted process, just Final Terms about a week after marketing began and pricing an hour later.

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Meanwhile in Germany, Paypal issued its inaugural consumer ABS and received another warm welcome from the market, finishing just 9bps wideof the recent Fortuna German consumer and fashioning a last minute upsize to the tune of €150m.

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And finally, German renewable energy provider Enpal, once again had an impressive outing with its consumer loans funding residential solar panels and heat pumps getting a lot of love from investors. It finished up being Enpal’s strongest performance in its three ABS visits.

The team there has proven solar ABS is possible, it would be great if others could begin to join them in this fledgling asset class.

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Quieter times are often fertile ground for esoteric trades.Indeed, this week we’re expecting a UK CMBS and a new UK non-conforming RMBS.

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I’m not always sure the logic of waiting for the market toget slower holds true, however. I understand that investors may have to take more time as the deals are invariably more complex, but demand may also have dried up, causing pricing to suffer.

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Coventry Building Society and Bank of Scotland both issued prime UK RMBS in the last two weeks, but likely got pricing slightly below expectations, simply because the sterling investor base is suffering with the weight of supply in the last few months. And if it’s a struggle for established issuers, shouldn’t it be even harder for newcomers and rare trades?

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With oil prices rising once again, and worrying noises aboutthe conflict in Iran escalating too, it will be interesting to see whether a number of these esoteric trades hold off until late August/early September,and decide to rub shoulders with more liquid supply expected at that time of year.

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Deal of the Week

Concept ABS Overview

Belgium's leading non-bank mortgage lender, Creafin (ranked number four in the Belgian broker market for residential mortgages, behind the three largest bank broker labels) has made its Belgian rmbs debut – kicking off a strategy to become a regular issuer in the market.

Offering a full capital structure and backed by a mixed BTL (33.8%) / owner occupied pool, the eponymous deal encountered a largely receptive market – albeit unequivocally busy and not quite at its most bullish at the top of the stack. With no Belgian RMBS seen since 2015, this was totally a price discovery exercise. But undemanding IPTs saw demand grow steadily, culminating in a last minute upsize... click here to read the full overview on Concept ABS.

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Concept ABS Market Context

A new name has been introduced to Euro primary accounts at a time when the market continues to demonstrate its resilience to bumper supply. Specialist lender Creafin's mixed pool of Belgian OO and BTL product has contributed to a roaring YTD of issuance thus far. In excess of E61bn of placement (incl. the current deal) is well past the mark set by H1-2025 (which was a post GFC record year of Euro ABS primary sales). Nonetheless, spreads are well supported throughout the stack even if the weight of triple-A paper means top rated spreads aren't quite at their tightest for the year. Meanwhile, Euro prime rmbs sales – at c.7bn incl. Creafin – are ticking along nicely in their own right – already within touching distance of the E7.05bn full year mark set in 2021 and over halfway to the post-GFC full year record of E12.9bn set in 2018... click here to read the full market context on Concept ABS.