ABS

The figures reaffirm that the Fed's quest to tame inflation will be bumpy as the economy has largely proven resilient to a year's worth of interest-rate hikes.

ARI has increased hard credit enhancement compared with previous transactions, however, which helps to the potential risk of offset negative excess spread.

HPEFS 2023-1, will benefit from a 1% reserve account, and 7.40% initial overcollateralization. A cash reserve account provides liquidity to the notes.

The pending transaction has a class D, unlike the previous transaction, the Santander Drive Auto Receivables Trust, 2023-1, and a higher cumulative net loss expectation.

Moody's notes that obligors that are large enterprises or public institutions make up 82% of the discounted receivables balance.

Government bonds surged and stocks slid as signs of distress at a California lender spurred broader worries over the US banking sector's debt holdings.

One enhancement to the notes, however, is a $55 million credit insurance policy from AIG Europe that covers the Rosy Blue Carat receivables.

Applications for U.S. unemployment benefits last week rose to the highest since December, suggesting some softening in what's still a tight labor market.

Subordination levels for classes A, B and C are 38.12%, 20.84%, and 0%, respectively, down from previous levels of 47.63%, 33.68% and 18.18%.

The bond market is doubling down on the prospect of a U.S. recession after Fed Chair Jerome Powell warned of a return to bigger interest-rate hikes to cool inflation.