9/22/2025
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As we come towards the end of September in London, it becomes abundantly clear that Summer is departing. Gone are the days of teeing off at 6pm and getting a full 18 holes in. Soon, the dog must be walked with haste before the parks shut and your canine companion is identifiable only by the flashing collar in the darkness.
In Madrid however, it’s a rather different story. Some of my ARC Ratings colleagues were out there last week, returning home with a tan and tales of 30-degree heat. “Absolutely beautiful,” said one smug so-and-so.
Perhaps that’s why this week the European ABS market had a distinctively Spanish flavour to it – led of course, by Spain’s foremost financial player, Santander.
While I would never say that you could have too much Auto ABS, it is a rather nice change to have something else to get stuck into now and then. And besides, there’s still a German (and 17% Austrian) Auto ABS from Auto Group 1 to discuss!
And last but not least, Bank of America and Together Money’s latest mixed pool UK RMBS deals means that sterling paper, while much less frequent than euros, is still ticking over.
Santander got things going for the Spanish ABS market this week with its €1.4bn Consumer ABS, Santander Consumo 9, which priced on Thursday.
The deal leaned into the playbook of the year – “low IPTs, let the books run”. The senior Class As saw solid, if unspectacular, demand – helped by €610m pre-placement and €150m of protected orders. The real action was in mezzanine and junior notes, where books ran hot: final coverages reached 9.3x for Class B, 8.3x for C, and 7.3x for E, with all printing at the tight end of guidance.
It’s now Santander’s second Spanish consumer ABS of the year and a clear sign that investor appetite isn’t confined to auto loans. Investors may become more selective given the flood of supply, but with coverage ratios like these, mezz and sub tranches are showing there’s still plenty of juice in the consumer pipeline.
However, we could be starting to see signs of that investor selectiveness. El Corte Ingles, the Spanish department store chain, issued its third Consumer ABS, the €800m Secucor Finance 2025-1.
Overall, the deal got away well, but investor appetite was quite varied throughout the capital stack. On the AA-rated seniors, split into a €332m offered A1 tranche and a €332m preplaced A2 tranche, it was difficult to build momentum with the books eventually reaching 1.3 times covered and landing at 87bps over 1-month Euribor from IPTs of mid-high 80s. It’s also worth bearing in mind that selling such a large amount of AA’s may not come easily.
Further down the structure, classes B-F were 6.1x, 5.2x, 2.4x, 5x and 1x covered, respectively with significant tightening on the class Bs – going from IPTs of mid-high 100s down to 145bps over.
Perhaps just a little warning to issuers that as we near the end of September, they can’t have it all their own way.
For Spanish securitization on the whole though, the combined €2.2bn of issuance sees the region achieve €8bn total volume for the first time since the GFC. Germany’s Auto ABS boom may grab all the headlines, but it is fantastic to see the market deepening in Spain (and beyond).
Elsewhere in euros, Auto1’s second edition of FinanceHero continued the incredible Autumn rush of euro Auto deals, taking issuance to €5.4bn in just a few weeks.
For the €248.8m AUTO1 Car Funding FinanceHero 2, 83% of the pool came from Germany and 17% from Austria, while the loans were all used-car deals. You might describe this as a slightly scruffier auto trade than normal and as a result, investors expected a bit of a pickup in spreads.
IPTs started 22bps wider than the recent similar trade of Red & Black Germany 13, but we’re talking about Austria, one of the richest countries in the world. It’s hardly a major worry from a credit perspective.
And so, unsurprisingly, there was a pretty strong bookbuild, underlining just how conditioned accounts have become to pile in once momentum is visible.
By pricing, the seniors were covered 2.7x, and the mezzanine notes went wild – 6.5x for Class B, 5.8x for Class C, and 5.2x for Class D.
With just over a quarter to go before the new year, UK issuance sits on €18bn (equivalent) issuance YTD. That means another €18bn is needed to match FY2024 volumes of €36bn.
Every week it seems I see a UK deal or two and think “ah – now we’re getting started”. But the avalanche of issuance just isn’t forthcoming. Now, for arranging banks and semi-journalists like me, it’s a shame. They get fewer fees, I can’t write about RMBS as much.
But if you’re an issuer, it’s bloody brilliant.
Together’s latest mixed buy-to-let and owner-occupied RMBS, the £367.5m TABS 14 2025-1ST1 did have to compete with Bank of America’s own mixed pool RMBS, the £1.2bn Frontier Mortgage Funding 2025-1, but surely came away delighted with how things have panned out.
There wasn’t massive tightening from IPTs in the way we’ve seen frequently take place in euros. But with the AAAs landing at 76bps over Sonia, it becomes the tightest mixed pool TABS deal since the series began in 2022, by a whopping 20bps.
Compared to the same deal back in September 2024, down the capital stack, the pickup for Together was 20bps, 20bps, 10bps, 50bps and 74bps.
Who said low volumes was a bad thing?
This week should bring more hope for a full UK restart though, with three deals on the way already.
That’s it from me this week. I have a rather hectic few days coming up as I attempt to buy a home in Surrey. Fingers crossed by the time the next edition is out, I’ll be all moved in!
Have a great week
Tom
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