Summary

Auto ABS shut down when mortgage-backed securities imploded.  This was unfortunate and unjustified, because it remained a sound investment, particularly when backed by auto loans originated and serviced by sound lenders such as the finance arms of Volkswagen, Honda and Ford.  There is a lot of money essentially on the side line in government securities and money markets earning a low return when auto ABS is a smarter option.

Analysis

If auto ABS opens up there will be a number of beneficiaries.  Auto manufacturers will sell more cars, investors will have an additional option for generating good returns, and in general, it will have a significant stimulative effect on the staggering economy.   Auto ABS has been on the back burner and it is past time for it to heat up.

Richard Van Leeuwen consults with leading institutions through GLG

What is a GLG Leader?|GLG Leaders are a separate tier of Council Members with a Council Rank in the top 5%. These GLG Member Program participants are eligible for ongoing, in-depth consultative relationships with GLG clients.

Former EVP, Chief Risk Officer, FORD MOTOR CREDIT COMPANY LLC

 
Analyses are solely the work of the authors and have not been edited or endorsed by GLG.