Bonds backed by auto loans are widely viewed as the most liquid sector of the asset backed market, according to a survey at the ABS East Conference, sponsored by Information Management Network

Half of respondents (50%) polled at a panel this morning see triple-A auto ABS as the more easily bought or sold without affecting pricing than any other type of triple-A.

Another 21.1% of respondents see credit card ABS as the most liquid triple-A, followed by 15.8% who see collateralized loan obligations as the most liquid and 13.2% who see the most liquidity in commercial mortgage bonds.

"We’re in a good spot right now in the markets from a supply/demand perspective… [There is] a lot of money that wants the product in certain asset classes," said Bob Behal, co-head ABS/CMBS investments at Vanguard Group. "What we worry about is when the market’s under pressure, how that liquidity profile changes.”

In a separate question posed at the same panel, a clear majority, 59.4%, said that they see non-agency residential mortgage backed securities as the sector with the least liquidity in triple-As.

That was followed by collateralized loan obligations and student loan backed securities, which were chosen by an equal number of respondents (15.6% each) as the least liquid sector. Another 6.3% see commercial mortgage bonds as the least liquid triple-A, while 3.1% consider all sectors of the asset-backed market to be “very liquid.” 

Scott Levy, a managing director at Guggenheim Securities, pointed out that liquidity is higher than ever for many traditionally illiquid products in the esoteric camp.

"There's more accounts looking at the [esoteric] space than ever before," said Barclays Director Will Zak.

There was no consensus on where we will be in terms of liquidity a year from now, but the panelists saw regulations as a major risk.

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