9/15/2025
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Working on a syndicate desk for a big, fancy investment bank has for many years been something of a fantasy to me. No doubt, it’s fueled by totally realistic films like The Big Short, Wall Street, Margin Call, American Psycho, The Wolf of Wall Street… you get the gist.
But it’s times like these where I imagine the desks to be some ungodly mess that no sane person would want to be anywhere near. At least that’s what I tell myself when there are ABS deals coming from all corners of the market.
We’re now fully into “back to work” mode with even more German (and Austrian) Auto ABS hitting screens, coupled with some Spanish and Dutch Consumer, and the slow awakening of the sterling market with a couple of Buy-to-Let RMBS trades.
But we shall begin this week’s Freshly Squeezed with the return of UK Auto ABS – because after nearly 12 months without a publicly placed deal, Volkswagen UK ended the hiatus with its £750m Driver UK 10.
The last sterling deal was all the way back in October 2024, in large part down to the uncertainty shrouding the market over claims that UK consumers were mis-sold car loans. The UK’s Court of Appeal initially ruled that potentially millions of customers were due compensation, but the Supreme Court limited the number of cases which would be eligible.
Now that the Supreme Court has provided more certainty over the scale of the compensation scheme, UK Auto ABS is back on the menu.
With such a huge gap between the last comparable trade and Driver UK 10, it was always going to be difficult to work out where the deal would land. To then have broader fears about the UK economy reflected in rising gilt yields two weeks ago, and then add in some heightened geopolitical tension after Israel’s attempt to take out Hamas leaders in Qatar, and this became quite a challenging environment to be pricing into.
But with UK supply unusually weak all year long in ABS, investors remained desperate to pick up some new issues. So with cautious IPTs of mid-60bps over Sonia, Driver drummed up healthy demand with the Class A’s 2.0 times covered and the B’s 5.4 times. The deal was originally slated to be £500m in total, but the strong demand meant they could bring the AAAs in by 5bps and upsize the total issue size to £750m.
A more than solid return for UK Autos, but I’m not sure I’d be banking on more than 1 or 2 extra deals this year.
Perhaps it’s a form of mental scarring, but in European ABS one always worries about investor indigestion. Too many deals from one name, one region or one asset class can see spreads suddenly drift wider as investors simply can’t take any more paper.
But so far in 2025, for German Autos, that couldn’t be further from the truth.
Four German Auto deals have been priced in September, taking the total to over €3bn of issuance, mostly AAA notes.
SocGen’s bellwether Red & Black program has now placed its third deal of the year and second using German collateral. And yet, they’ve managed to place the €648.9m of AAAs at 48bps over 1-month Euribor, the tightest spread of comparable trades since BMW’s Bavarian Sky deal in January.
Then on the same day, Santander Consumer’s first German Auto lease deal since 2023 managed to place €639.8m of AAA notes at 49bps over 1-month Euribor, although €264.8m of that was pre-placed.
There’s still plenty of macro-noise bubbling under the surface, but for now it seems that investors across Europe see Auto ABS as a pretty safe place to guard against things like inflation risk.
Nor has this glut of supply deterred newcomers. Auto1 Group, Europe’s largest digital platform for buying and selling used cars via its retail brand Autohero, is bringing its second ever Auto ABS, the €230m FinanceHero 2.
On its debut, the deal was 100% German collateral but this time, the pool features 83% German loans and 17% is made up of Austrian loans.
A full capital stack is on offer, and providing all goes well, it would take German Auto issuance up to €3.5bn in just over two weeks. A remarkable year for Auto ABS continues.
Looking ahead to this week, it’s going to stay busy once again. There is finally a sense of momentum building in Sterling, with Together marketing an owner-occupied and buy-to-let mixed pool RMBS at the same time as Bank of America hit screens with its own mixed pool RMBS via its new Frontier Mortgage Funding shelf.
Meanwhile in Euros, aside from Autohero’s German/Austrian Auto deal, we have a couple of Spanish Consumer ABS trades and a Spanish legacy RMBS.
I cannot believe I have held my breath on my golfing weekend for this long. You may recall I had the small matter of a Semi-Final match this weekend. And despite making pars on the first four holes, I found myself 2 down. I stayed calm, got into the driving seat 2 up with 5 holes to go. And duly collapsed, 3-putting on the 18th hole to send it to golf’s equivalent of extra-time.
Up we went to the 1st hole once more (now our 19th hole). And by some miracle I kept it together to book my place in the final!
That takes place on October 4th. So, I’m sure you’ll all be desperate to read the October 6th edition of Freshly Squeezed ABS just for that!
Have a great week
Tom
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