ABS spread performance continues to lag that of Corporates, with more room for improvement. Given the continued attractive pricing of subordinate ABS relative to Corporates, we maintain our modest overweight recommendation, where the "modest" reflects our continued concern about the health of the consumer. On the BBB ABS, while spreads have tightened 50 bp since our initial buy recommendation in late January, the relative lack of tightening has been extraordinary. Given what is effectively a senior position in the capital structure, we think the ABS is fundamentally undervalued relative to the Holding Co. unsecured debt. We recommend selling the Corporate debt to buy the ABS.

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