Despite investors expressing concerns that the marketplace lending universe will be among the first to feel the heat amidst the weakening financial market, it has been witnessing exponential growth over the last few years, reports Morgan Stanley. Considering the Asset-Backed Securities (ABS) market’s importance as a source of key financing to the U.S. consumer sector, Jeen Ng and team have unveiled their ABS Dashboard to highlight data on total returns, secondary market pricing and new issuance in the ABS realm.

Marketplace lending: auto and credit card ABS print positive total returns

Tracking total returns for different ABS sectors and tenors, Ng and team point out that 2015 was a story of two halves, replicating a similar trend in several securitized market sectors. They point out that total-return performance was generally better across sectors in the first half and then deteriorated as illiquidity premia rose in the second half. The MS analysts point out that auto and credit card ABS clocked positive total returns, beating the Barclays Aggregate Index for 2015. However, the student loan ABS sector felt the most pain in 2015, particularly within the FFELP program, largely due to proposed rating agency methodology changes.

Tracing the first two months of performance this year, the MS analysts point out that credit cards and autos remained fairly resilient, clocking consistent positive returns, while student loans continue to be the worst performing sector:

Total returns

The analysts point out that since the beginning of the year, new issuance has been muted across many credit products in the secured, unsecured and securitized spaces. However, they add that Auto ABS is a notable exception as YTD, $17.7 billion of new Auto ABS have printed. Striking a positive tone, Ng and team point out that an open and fully functional new issue market for Auto ABS bodes well for credit availability for auto loans.

New issuance

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