After a long spate of spotty issuance, a solid pipeline of European auto securitization deals has emerged as part of the big fall lineup. According to Deutsche Bank analysts, the auto ABS market had fallen into near insignificance in recent years, with the sector poised, until recently, to show one of the weakest growth rates among the various asset classes in Europe. However, with the pipeline up ahead, 2006 is now expected to be a record year in terms of sector volumes.
The pipeline is currently filled with 5.7 billion ($7.2 billion) worth of deals backed by auto loans that are set to price in the near term. Renault and Porsche are among the sellers while Russian assets are counted among the collateral behind these transactions. "The recovery in auto securitization has more to do with balance sheet efficiency for car manufacturers, in our opinion, rather than the need to finance receivables growth - indeed, car sales remain flat," Deutsche Bank analysts said. "Auto ABS continue generally to be very well bid, helped to a large extent by rarity and diversification value."