The slower pace of new issuance in consumer asset-backed securities, especially from the historically largest issuers, leaves the market without benchmarks to base pricing on, according to a report by Wells Fargo.
According to Wells Fargo, new issuance volume through July has fallen 9.4% behind the 2012 pace. Analysts said that they expect the combined new issuance for June and July to total $22 billion in 2013 but in 2012 the combined total for the two months was already at $37 billion.
More troubling is that the largest ABS sponsors showed the largest issuance gaps. Ally Bank, Sallie Mae and GE would need to each issue $7 billion to $8 billion to match their 2012 levels, according to the report.
Ally Bank, the largest single ABS issuer in 2012, issued $13.9 billion last year across its retail auto loans, lease and floorplan platforms. In 2013 the issuer has only come to market with one new retail auto loan deal compared with five new deals by this time in 2012. That puts the issuer’s ABS gap at $8 billion currently, said Wells Fargo.
“The consumer ABS market is reorienting itself more toward a credit product compared with the larger, more liquid deals and issuers that market participants had been accustomed to prior to the financial crisis,” said analysts at Wells Fargo in the report.