Asset Backed Securities

As the first quarter of 2025 concludes, TwentyFour Asset Management’s Pauline Quirin shares her take on the strong performance of the securitisation market and insights for European ABS and Collateralised Loan Obligations (CLOs).

Last week we wrote about a notable shift in market sentiment and how this had impacted our view of relative value within fixed income. So, where has the impact been felt, and has it changed our view on relative value?

The recent rally in European fixed income has partly been driven by improved economic sentiment, falling inflation expectations, and a more accommodative monetary policy outlook from the European Central Bank (ECB) and the Bank of England (BoE).

As the fourth quarter of 2024 comes to a close, TwentyFour Asset Management’s Douglas Charleston reflects on the past year’s events and explains why, in his view, the record supply of European ABS and CLOs in 2024 is likely to be matched in 2025.

Will volatility in government bonds continue? Has fixed income seen “peak ESG”? And what will be the biggest driver of returns?

Given modest interest rate cut projections, a stable if not stellar macro backdrop and better relative value than corporate credit, we think European ABS investors can expect another strong year of supply and returns in 2025.

Last week Fitch Ratings published a report concerning asset performance deterioration in UK residential mortgage-backed securities (RMBS) originated prior to the global financial crisis (GFC).

Spread tightening has left some market participants nervous about fixed income valuations going into 2025, but we think the drivers of recent credit performance are unlikely to weaken materially in the coming months.

With a macro backdrop of falling rates and solid global growth, TwentyFour Asset Management's Eoin Walsh says fixed income investors can expect healthy total returns in 2025.

Last week, members of TwentyFour’s asset-backed securities (ABS) portfolio management team were in Dana Point, California for the Opal Group CLO Summit, an annual event with over 2,000 participants made up of investors, bankers, CLO managers, service providers and lawyers.

In this month's Flash Fixed Income, we look at how bond markets are reacting to Donald Trump's victory in the US election. With Trump's stated policies widely regarded as being inflationary, we expect a bigger divergence in the path for interest rate cuts between the US and Europe that might favour higher quality European credit.

Over the past decade, private credit has grown from a $400bn niche industry into a $1.6tr market that competes with more traditional asset classes for significant investor allocations.