Asset-Backed Securities Opportunities Remain Plentiful
January 2026
By Youriy Koudinov, Director – Senior Structured Analyst and Trader; Peter Chung, Director – Private Asset-Backed Securities
ABS issuance remained robust in 2025, totaling $366 billion in new-issue transactions (Bloomberg, January 2026). The U.S. Public/144A ABS market, currently about $843 billion outstanding (Barclays Research, October 2025), is a large, diversified, and liquid segment of fixed income comprising numerous asset sectors.
In addition to consumer ABS sectors—such as auto loans, credit cards, and student loans—that are often included in major fixed income indexes, the market also provides access to higher-yielding, less correlated sectors including digital infrastructure, equipment, music royalties, consumer loans, and more. This breadth allows investors to customize exposures to specific duration and credit-risk profiles.
The private ABS and asset-based finance (ABF) market has also continued to expand, providing access to assets through structures beyond those typically available in public ABS, including portfolio financings, whole loans, and other bespoke arrangements. Private ABF typically offers a meaningful spread and yield premium relative to public ABS while allowing investors to directly negotiate transaction terms. These negotiated features, including collateral eligibility, advance rates, performance triggers, cash flow waterfalls, and reporting, can enhance downside protection and support closer alignment with investor risk, duration, and return objectives.
Figure 1 - The Evolving ABS Opportunity Set
Total ABS Issuance ($MM)
Source: SIM, Barclay’s research, Finsight, and Intex. As of October 24, 2025.
ABS Outstanding ($B)
Market Outlook
The public Asset-Backed Securities (ABS) market and the private Asset-Backed Finance (ABF) market offer attractive yield and spread pickup over traditional fixed income, along with the flexibility to construct diversified exposures across duration, credit-risk, and thematic-exposure objectives. Allocators using more traditional Core and Core Plus strategies for fixed income exposure are likely not getting access to the interesting investment opportunities available in the asset-backed markets. We believe both public and private ABS will continue to benefit from robust issuance and will provide enhanced protection against credit and convexity risks due to strong structural features and asset-specific prepayment behavior—many ABS sectors exhibit muted prepayment sensitivity to interest-rate movements.
Several ABS sectors also appear poised to benefit from sustained secular tailwinds while offering higher yields and valuable portfolio-diversification benefits. Examples include digital infrastructure (fiber, data centers, cell towers), music royalties, and transportation infrastructure (containers and railcars), among others. These segments create opportunities for thematic, sector-specific investment sleeves within broader portfolios to enhance yield relative to traditional fixed-income allocations.
Looking ahead to 2026, we expect strong ABS issuance to persist across both public and private markets as issuers continue to access securitization channels to meet funding needs amid a shifting Federal Reserve policy environment and rising geopolitical uncertainty.
Figure 2 - Spread and Duration Comparison by Index/Strategy
|
Index/Strategy |
Average Spread |
Duration |
|
US Aggregate |
39.8 |
5.98 |
|
A Corporates |
64.6 |
6.81 |
|
SIM Public ABS A-rated |
140-2501 |
3-51 |
|
SIM Private ABF A-rated |
140-2501 |
3-71 |
1 Average spread and duration vary by asset class. Spread measures the yield difference between the bond or debt instrument and risk-free benchmarks of similar maturity or duration, reflecting the additional risk associated with bond or debt instrument.
Sources: Bloomberg Indices and Symetra Investment Management as of 12/31/25
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