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From Data Centers to Solar ABS – Inside Esoteric ABS with Conning’s Nowakowski
Apr 30, 2025
Mike Nowakowski, Head of Structured Products at Conning, shares his insights on the intriguing world of esoteric asset-backed securities (ABS). With esoteric ABS now making up over 30% of total issuance, he explains the allure of unique assets like shipping containers, data centers, and music royalties. Dive into the benefits of these investments compared to traditional ones, and discover how institutional investors are shifting focus. Plus, explore the evolving solar ABS market and the impact of tariffs on big players like Microsoft and Amazon.
21:26
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Quick takeaways
- Esoteric ABS is thriving in 2025, comprising over 30% of ABS issuance, driven by unique assets like data centers and music royalties.
- Investors are increasingly attracted to esoteric ABS due to structural advantages and the promising growth potential of niche markets like fiber networks.
Deep dives
Understanding Esoteric ABS
Esoteric Asset-Backed Securities (ABS) differ from traditional ABS through their underlying collateral, which includes less conventional assets like data centers, shipping containers, and music royalties. While traditional ABS often involves auto loans or credit card receivables, esoteric ABS maintains a similar structural framework but introduces these unique asset types. Investors are drawn to esoteric ABS due to their structural protections, such as over-collateralization and subordination, which help mitigate risks. As a result, these securities can offer interesting opportunities for diversification and yield in an uncertain market.
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