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Asset Backed Securities

All articles tagged with #asset backed securities

markets16 hours ago•37 min saved

Trump's 10% Card Cap Could Shrink a $70B Credit-Card Bond Market

Trump’s push to cap credit-card interest at 10% could force lenders to bolster bonds backed by card debt, squeezing profits and likely shrinking the roughly $70 billion credit-card ABS market. The cap would reduce excess spread to crisis-era levels, potentially triggering capital injections or early amortization, with nonprime borrowers hit hardest. JPMorgan cautions issuance and profits could drop, Moody’s says the cap would be negative for credit-card bonds, and regulators may face implementation hurdles as banks warn tighter caps could slow lending and the economy.

via Bloomberg.com|

#asset-backed-securities #bonds #credit-cards

finance4 months ago•6 min saved

Subprime Auto Lender Tricolor's Collapse Sparks Market Concerns

The collapse of Texas-based subprime auto lender Tricolor, amid alleged fraud and rising delinquencies, highlights growing risks in the $80 billion subprime auto ABS market, raising concerns about lax lending standards and potential ripple effects on Wall Street, despite the market's smaller size compared to past crises.

via Bloomberg.com|

#asset-backed-securities #auto-loan-market #finance

finance2 years ago•1 min saved

"Wall Street Regulator Implements Dodd Frank Rule to Combat Trader Conflicts"

The U.S. Securities and Exchange Commission (SEC) has adopted a rule, mandated by the Dodd Frank law, that prohibits traders in asset-backed securities from betting against the same assets they sell to investors. The rule aims to prevent conflicts of interest and eradicate behavior that contributed to the 2008 global financial crisis. The rule applies to underwriters, placement agents, and sponsors for asset-backed securities, but exempts activities such as hedging risk and market-making. The SEC modified the proposal to include exceptions for affiliates not acting in concert with traders and investors with "long" positions. The rule will be effective for asset-backed securities closing 18 months after it appears in the Federal Register.

via Reuters|

#asset-backed-securities #conflicts-of-interest #dodd-frank

finance2 years ago•4 min saved

The Risky Business of Subprime Auto Lending: Delinquencies Soar as Easy Money Ends

Subprime auto loan delinquencies have reached a record high, with the delinquency rate for subprime-backed Asset-Backed Securities (ABS) hitting 6.1% in September. In contrast, prime-rated auto loans have remained in pristine condition, with a delinquency rate of just 0.27%. Subprime auto lending is a high-risk, high-profit business that primarily targets used vehicles, while new vehicles are largely reserved for prime-rated customers. The government's pandemic relief measures temporarily lowered subprime delinquency rates, leading to aggressive lending practices and the subsequent collapse of some specialized subprime dealers and lenders. Despite the risks, subprime auto lending remains attractive to investors due to the high interest rates and potential for large profit margins.

via WOLF STREET|

#asset-backed-securities #delinquency-rates #finance