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New ABS business hits $366.5 billion, not reached in 2021

A year after Russia declared war on Ukraine, the Federal Reserve took a hawkish stance against record-high inflation and the mortgage industry began to shrink. , according to data compiled for Asset securitization report.

The drop was widely anticipated across the industry. Overall, managers made about $427.01 billion in new securitization businesses last year, according to sample data from . ASR database.

According to the database, production value for the fourth quarter of 2022 was approximately $50.3 billion.

Asset securitization report

The mortgage-backed securities (MBS) asset class was the top producer in terms of both deal volume and volume, with about $127.3 billion in new deals annually out of about 200 deals. The RMBS sector had the highest output by asset class, but it still fell about 16% from $151.5 billion in 2021. ASRdatabase suggests.

The industry does not expect RMBS to improve in 2023. This is largely due to underlying pressure on the mortgage industry.

Analysts at the Kroll Bond Rating Agency said in their 2023 Structured Finance Overview, “We expect issuance volumes to remain low for at least the first half of 2023 due to the current interest rate environment. There is.” “Interest rates are holding back mortgage supply and unfavorable private-label securitization spreads are making GSE and balance sheet funding more attractive.”

KBRA noted one segment of RMBS business that increased in 2022, the non-qualified mortgage segment. Even that segment won’t be able to outshine the entire mortgage segment in 2023, ratings agencies suggest.

According to a KBRA brief, “Economic conditions for major issuers vary, but the sector will struggle in 2023 due to high interest rates and volatile spreads.”

The auto, credit card, and student loan asset classes followed, with approximately $120.2 billion, $31.1 billion, and $6.9 billion in production respectively.

A drop in production was typical of 2022, but not for credit cards. Production in this segment was about $31.1 billion for the full year 2022. ASR data suggests.stood out during a period of rising interest rates When Inflation may have prompted consumers to discard their cards. Instead, they continued to swipe and tap, pushing up the securitization sector.

However, KBRA analysts have noted declining credit performance across most consumer segments over the past year. On credit cards, in 2022 he increased his 30+ days arrears rate by 2.6%. Accounts under 620 saw a significantly higher increase in 30+ day delinquency rate of 8.2%.

Of the securitization sectors that have seen declines, student loan ABS appears to have suffered the most. Full-year 2022 issuance is about $6.9 billion, down 67.9% from last year’s total of $21.6 billion.

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