Securitisation

Following the introduction of the European Union’s securitisation regulations in 2013, the Australian securitisation market initially lagged behind in aligning with European investors’ standards. Over the past decade, however, the market has undergone significant changes and recent record issuance shows investors are increasingly seeing the opportunity in Australian ABS.

It has been two weeks since the primary market for collateralised loan obligations (CLOs) re-opened and 2025 has already proven to be quite a year from multiple angles.

With a macro backdrop of falling rates and solid global growth, TwentyFour Asset Management's Eoin Walsh says fixed income investors can expect healthy total returns in 2025.

Last week, members of TwentyFour’s asset-backed securities (ABS) portfolio management team were in Dana Point, California for the Opal Group CLO Summit, an annual event with over 2,000 participants made up of investors, bankers, CLO managers, service providers and lawyers.

The start of the school year ordinarily also marks the end of summer for the primary bond markets as issuance restarts, though this year feels rather different.

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.

The tightening of monetary policy has given rise to concerns about the health of mortgage markets due to higher interest rates , leading to questions about the expected resilience of residential mortgage-backed securities (RMBS).

After a horrible year for financial markets in 2022, the macro-outlook for 2023 had a lot of consensus views, with most predicting a much better year ahead, helped by supportive rate cuts from central banks and positive returns from both government bonds and credit.  

Last week Aza Teeuwen and our ABS team visited the Global ABS conference in Barcelona. One key discussion point in CLOs was around the lack of leveraged loan supply and the resultant sharp slowdown in the primary market

Last week saw three UK Prime RMBS deals served up to ABS investors, the most liquid part of the European ABS market. In our latest blog we hear from Douglas Charleston who analyses these recent deals and what it means for this market segment.

Given the current macro environment, Pauline Quirin believes loans with near term maturities provide a useful insight into where risk lie.

Douglas Charleston looks at the wider implications of recent bank sector volatility and the opportunities it presents for credit investors.