Consumer ABS

Ally Commercial Finance added a new director that will focus on working with financial sponsors and handle leveraged loans, the firm said.

Deals by first-time issuers of subprime ABS are wildly oversubscribed, the credit quality of the underlying assets is deteriorating, profit-hungry investment firms are buying stakes in issuers, and financing costs look to hold at record lows for the indefinite future.

Subprime ABS is making a comeback, mostly through auto deals. Some issuers are even doing these deals for the first time.

In the ASR Scorecards database's preliminary public lead manager rankings for 1Q12, Citigroup Global Markets took the No. 1 spot with a 12.6% market share and $4.8 billion sold. Citi rose three spots from 1Q11 with a 14.7% market share and $2.07 billion sold. ASR's 1Q12 numbers are as of March 26 while its 1Q11 are as March 31, 2011.

The latest wave of proposed European regulations on rating agencies, known as CRA3, contains a rule that has unsettled players from every corner of the financial market: enforced ratings rotation.

Experian Information Solutions' research indicates that, while the credit quality of auto loans may be slipping, it remains high enough to ensure the strong performance of the 2011 and 2012 vintages of securities backed by such loans.

Wells Fargo Securities analysts said today that the low interest rate environment might pose challenges for certain consumer ABS sectors, particularly as spreads further tighten.

New data shows that originations continue to grow in several categories — especially to subprime credit card customers.For bank credit cards, lending to subprime customers increased 41% from 2010 to 2011. Subprime borrowing hit a four-year high in December with 1.1 million new bank credit cards issued, according to a National Consumer Credit Trends Report produced by Equifax [EFX] and CreditForecast.com. CreditForecast.com is a joint venture of Equifax and Moody's Analytics.

For now at least, the Obama administration is declining to endorse legislation by Illinois Sen. Richard Durbin that would allow borrowers to discharge their private student loan debt in bankruptcy.During a congressional hearing on Wednesday, Treasury Secretary Timothy Geithner was non-committal about the legislation, while at the same time suggesting that he is broadly sympathetic with Durbin's concerns about the private student loan market.