(Bloomberg) -- Asset-backed securities sales will be as much as 15% higher this year as risk premiums on the bonds tighten, according to
Brock Wolf, the firm's head of securitized products group, sees issuance increasing by up to 10% next year as companies offering this debt are able to borrow on more favorable terms.
"It's just a great time to be an issuer," he said in an interview. "There's so much capital chasing our markets, and it feels like every deal has been successful recently."
New US ABS sales have surpassed $300 billion for a third straight year, with issuance already 11% higher than it was at this point in 2025, according to data compiled by Bloomberg. Spreads on the debt are the narrowest in more than four years.
ABS are considered relative safe havens during volatile periods. They also tend to be shorter in duration than other fixed-income assets, making them less sensitive to rising interest rates and potentially more attractive if inflation concerns persist.
Wolf doesn't expect spreads to widen in the short term. Companies spending on data centers and banks undertaking synthetic risk transfers will likely be some of the biggest issuers in securitization markets, he added.
"The geopolitical situation is volatile and is something we're always keeping an eye on, and that's the biggest unknown," he said. "So how the Federal Reserve responds to inflation and where oil prices go — those are the biggest two things that we're focused on."
The Fed raised interest rates for the first time since 2023 last week and penciled in an additional hike later this year.
--With assistance from Charles Williams.
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