ABS Weekly: Macro factors continue to be supportive of tighter spreads

Research evidence excerpt

ABS Weekly: Macro factors continue to be supportive of tighter spreads

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ABS Weekly

Macro factors continue to be supportive of

tighter spreads

Spread unchanged but tightening expected to resume 15 May 2026

Secondary spreads were unchanged across ABS sectors. However, the ICE BofA indices Securitized Products Strategy

we track tightened 2-4bp. As we have noted over the past few weeks, we believe United States

spreads for ABS will continue to move to tighter levels as the overall economic

environment remains favorable for credit performance in most sectors, although higher Chris Flanagan

inflation and higher fuel prices could place pressure on subprime borrowers and travel FI/MBS/CLO Strategist BofAS

related sectors, respectively. We expect spreads to tighten to their 24-month lows +1 646 855 6119

before settling into a range, with several sectors now within 5 bp of that level, including christopher.flanagan@bofa.com

the prime auto loan (senior notes), retail auto lease, credit card, utility fee, corporate TheresaABS StrategistO'Neill

fleet, fiber, and railcar ABS sectors. Based on new issue pricing, we prefer credit link BofAS

+1 646 855 9285

notes (CLN) over cash ABS in the prime auto loan ABS sector for the incremental spread theresa.oneill@bofa.com

(~25bp AAA, ~15bp, 5bp A, ~10bp BBB) and greater issuer diversification in lower rated Alvin Fung

tranches. We also prefer corporate fleet ABS over prime auto loan ABS for the ABS Strategist

BofAS

incremental spread (9bp for LCF seniors) and diversification away from the consumer. +1 646 855-9091

Click links for ABS new issue volume and pricing by deal and ABS Spreads time series. alvin.fung@bofa.com

Data show

See Exhibit 29 on page 26 for commonly used