U.S. SF Issuance Takes a Breather in September, YTD Volume Remains Up 12% Versus 2017 (Manzi)
U.S. securitization issuance was $33bn in September, the lowest total for the year thus far. The likely culprit was holidays and conferences, as overall conditions still appear generally supportive of issuance, and pipelines are re-building to kick off October. New issue volume YTD in 2018 is now $409bn, up about 12% versus $365bn during the comparable 2017 period. Three of the four major sectors remain up y/y, with CMBS the exception, down 11%. (See the table below for more.)

ABS issuance was $15bn in September. Auto loan/lease ABS contributed $5bn, just ahead of cards, at $4bn. The student loan, commercial (equipment, fleet, floorplan), and esoteric sectors added $2bn each, and a $270mn unsecured consumer/personal loan deal also priced. While the last week of the month was quiet, with only an aircraft ABS deal pricing, several new presales were published, including the latest Verizon deal. Click here to download them.

CMBS printed about $4bn in new issue volume, bringing the YTD total to $58bn, down 11% y/y. CMBS is the only major sector posting a decline in volume so far this year. Our initial forecast of $85bn for the full year is now looking a bit optimistic, although the annualized total would fall in the $75–$80bn range, which isn’t that far off. Single borrower new issue volume continues to run about even with conduits on a YTD basis, compared to a 38% share in full year 2017 and 28% in 2016. We recently published a brief article on Proposition 13 and its potential impact on California commercial real estate/CMBS. Click here to read it.

CLOs slowed down a bit in September, but still printed $8bn in new issue and $9bn in reset/refi volume. The YTD new issue total is $101bn, and remains up over 20% y/y, while reset/refi volume, at $124bn, is just under last year’s output through three quarters. Click here for all recent CLO research; in September we published a roughly 30-page primer for the sector.

RMBS added $6bn last month, bringing YTD volume to $63bn, up nearly 30% y/y. One area responsible in part for that y/y growth is non-QM, which has printed over $7bn in issuance this year, nearly doubling last year’s total. Just prior to the ABS East conference, we penned Non-Qualified Mortgage Prepayments: Is It Life In The Fast Lane, Or Will They Start To Take It Easy? The article is focused on the question of why non-QM mortgages prepay relatively fast within a year of origination. You can click here to read it.

Turning to the numbers… The 10yr Treasury was 3.06%, unch. w/w. NYMEX crude oil continued its recent ascent, up roughly $2.50 w/w to $73.56/bbl. The S&P 500 was down 16 pts w/w to 2,914. U.S. regular gas prices averaged $2.88/gal. on September 29, up 3 cents w/w and 31 cents y/y. The Euro was trading at $1.18, down two cents w/w. The Freddie Mac survey rate for the 30-year FRM was 4.72%, up 7bps w/w and up 89bps y/y, and reaching the highest mark since April 2011 (4.78%).

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