The U.S. auto ABS market has soared to new heights this year with over $100 billion in issuance, and performance has stayed strong throughout and even improved, according to analysts. However, questions about the strength of the U.S. consumer loom in the background, as do the ever-present theories that the hot pace of the sector, and the ABS market in general, will crack and come tumbling back to earth.
The auto sector started 2005 with a bang, generating $11 billion in issuance during the usually dull first two weeks of the year. This pace, if it had been sustained, would have led to an unthinkable $250 billion for the sector. While such a torrid pace was impossible to sustain, the market managed to generate an average of nearly $3 billion per week. Despite some widening around springtime, spreads have maintained relatively tight levels, with one-year fixed-rate tranches quizzically gapping out beyond two-years since late summer.