Asset Backed Securities

In the first week of June, the European asset-backed securities (ABS) market participants flocked to sunny Barcelona for the 28th Global ABS conference.

The term ‘fossil fuel financing’ refers to the provision of capital (including loans, investments, and other forms of capital) to companies involved in the exploration, extraction and production of coal, oil and natural gas.

Douglas Charleston, Partner & Portfolio Management, concludes the first quarter in 2024 for the Asset-Backed Securities team, noting that while major economies remain resilient, the rates markets have undergone significant shifts, with central banks reassessing their rate cut expectations.

In this Back to Basics webinar, Aza Teeuwen (Partner, Portfolio Management) and Elena Rinaldi (Portfolio Management), provided a comprehensive understanding of the key aspects and trends within the European CLO market.

Despite the cost-of-living crisis and inflation crunch on consumers, they have proven exceptionally hardy, with their financial health remaining remarkably strong during a very difficult period.

Much like the European market, Australian ABS has started 2024 with considerable momentum, with over AU$12bn in issuance year-to-date and a significant pipeline building. But how are its green credentials?

Last year was a volatile year for global markets but also one where economies performed better than expected. If we look at the leveraged loan market, last year was characterised by a surge in so-called amend and extend (A&E).

Income has returned. After a couple of barren years, yields in high-quality bonds that were not too long ago returning just 2% or 3% are now set to bring in 7% to 8%. And this jump in yields looks to be a game changer for investors.

In this Back to Basics webinar, Aza Teeuwen (Partner, Portfolio Management) and Douglas Charleston, (Partner, Portfolio Management) provided a comprehensive understanding of the key aspects and trends within the European RMBS market.

Aza Teeuwen reflects on a busy quarter for the Asset-Backed Securities team, highlighting the primary deals and trading that occurred all the way through the quarter until the end of December, the performance of ABS for the quarter, and his confidence that ABS is in a good position to carry its strong momentum into 2024.

Within the European ABS landscape, Volkswagen Leasing has solidified its role as a benchmark issuer under the Volkswagen Compartment Leasing (VCL) platform. Volkswagen uses this platform – with over 25 years of history – to finance standard German auto loans. It is probably one of the least exciting platforms but also one of the most liquid ABS investments you can buy.

Douglas Charleston, believes 2024 will continue to provide the carry that has been so welcome, but see market growth and diversity continuing to make European ABS increasingly scalable.