FICC Focus ABS 2025 Market Dynamics With BI’s Rod Chadehumbe: Macro Matters
8 snips
Dec 5, 2024 Rod Chadehumbe, an asset-backed securities strategist for Bloomberg Intelligence, dives into the current landscape of the US ABS market. He discusses how recent tightening in corporate bonds has made ABS more appealing. Chadehumbe explains the engineering behind various ABS products, highlighting risk profiles and investor protections. He also touches on the impact of inflation on auto financing and offers insights into expected trends and issuance for 2025, making it clear that navigating this market requires keen awareness of liquidity and volatility dynamics.
AI Snips
Chapters
Transcript
Episode notes
ABS Market Overview
- The asset-backed securities (ABS) market offers diversification through various products like auto loans and leases.
- The U.S. ABS market exceeds $3 trillion, focusing on credit card and auto ABS within the Bloomberg Aggregate Index.
ABS Structure
- ABS are structured to let investors lend on pooled assets, receiving returns from cash flows.
- Auto loan ABS involves monthly payments secured by the vehicles themselves, with repossession occurring upon delinquency.
ABS Investor Protection
- Investors benefit from contractual cash flows and pledged assets within ABS.
- A 5% risk retention rule ensures alignment between ABS issuers and investors.