Securitization

Aside from the assets' credit quality, the bank's 60 years of experience originating and servicing auto loans is a boost to the notes' credit.

Borrowers in GCAR 2025-1's underlying collateral pool have a slightly lower FICO score than the GCAR 2024-4 deal, and they bought more new cars.

Among the deal's main credit strengths is that the real estate assets are protected by robust physical security, and 83.5% of the tenants have investment-grade credit ratings.

For conservative and risk-averse insurers, the vehicles are a relatively cheap and safe way to take part in the private credit boom that's financing mostly unlisted and leveraged companies.

The deal will sell two series of notes from a new master trust, secured by revenues from three data centers in Phoenix and Toronto.

All the class A notes benefit from total initial hard credit enhancement totaling 21.0% of the pool balance. Classes B, C and D benefit from 17.0%, 11.5% and 6.5%, respectively.

RG&E, series 2025-A, is the second utility cost recovery securitization this week, and is another first-time issuer.

Both forward-flow agreements and the larger asset-backed securitization market are becoming more popular, as consumer debt is growing.

Portfolio enhancements and diversifications cushion the impact of the L.A. wildfires from RMBS losses.

The GMALT 2025-1 securitization has just 24.4% of contracts with original leases longer than 36 months. It's the lowest level for the platform, a credit positive.

Tenants also have a high average credit quality, with 75.9% of them having at least an investment grade rating, and lease assets underlying the class A notes have a loan-to-value (LTV) ratio limited to 70%.

The riskiest portion of the securitization, known as the equity, was placed with investors including sovereign wealth funds, pension funds and family offices

Residential customers made up 70.1% of NYSEG's sales revenue, while commercial and industrial customers account for the other 30% of sales. The latter is a relatively high exposure for such deals.

Unlike previous FIGRE deals where overcollateralization provided credit support to the notes, FIGRE Trust 2025-HE1 has a class G composed of principal-only notes that provide the credit support.

Debt service coverage ratio triggers, including cash trapping and rapid amortization, will provide much of the credit enhancements to the notes.

The deal has a step-up coupon feature that calls for the fixed rates on classes A1, A2 and A3 to increase by 100 basis points, subject to the net weighted average coupon (WAC) after four years.

The multifamily property securities market is expected to stay resilient, despite weaknesses in certain markets due to cooling rent growth, higher vacancy, or oversupply.

Called collateral from various series increased to 6.0%, from 4.0%, while weighted average seasoning increased to 3.15 months from 2.82 months.

Collateralized loan obligation activity should increase despite higher-for-longer rates and liability management exercises.

Stability in mortgage rates may be key to unlocking pent-up demand during the upcoming spring homebuying season, but with loans still expensive and prices continuing to rise, affordability remains a hurdle.