The aircraft sector of the ABS market is still grasping at straws when it comes to mapping out its future and deciding on what changes should be implemented, panelists said at a recent gathering hosted by UBS. As a result, differences in valuations and rating methodologies offer structurally savvy investors opportunities for incremental yield in the tight credit environment.

Noting that aircraft ABS has underperformed expectations by three standard deviations, UBS director and aircraft ABS trader Mostafiz ShahMohammed told the up to 280 attendees that the likelihood of default of both primary and backup servicer was small and that, even if this changes, sources of value exist at the right price.

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