Trend Category

Key Developments

Data/Examples

Source

Asset-Backed Securities (ABS)

Renewed activity in CMBS, RMBS, auto, consumer, solar, renewable energy, and utilities.

Significant growth in 2024; CMBS issuance potentially exceeding $110B in 2025 S&P Global Ratings

Dechert Report

Collateralized Loan Obligations (CLOs)

Record issuance activity up to 2024 with a bullish outlook into 2025; improved default profiles via refinancing improvements.

Over $200B in issuance in 2024; robust market entry of new players Moody's

Dechert Report

Development Aspect

Description

Specific Data/Patterns

Source

Regulatory Environment

Increased focus on transparency with legislation including the Corporate Transparency Act and ESG disclosure regulations.

New disclosure requirements affecting issuance structures.

Dechert Report

Market Growth & Sentiment

Buoyed by easing inflation and resilient investor appetite across sectors.

Declining CLO defaults and strong ABS growth expected in 2025.

Moody's

New Market Entrants

Entry of innovative players diversifying product offerings in both ABS and CLOs.

Record issuance in CLOs exceeding $200B driven by diversified asset pools.

Dechert Report

Sector

Observed Trend

Financial/Volume Data

Driving Factors

Source

ABS

Increased activity in niche segments (e.g., auto-related and equipment ABS)

Auto lease ABS up by 30%; strong liquidity focus

Higher yields, diversification, sustainability disclosures

IQEQ, S&P Global

CLOs

Stable to growing investor demand with participation by private credit funds

Middle market CLOs are a substantial share of new US issuance

Improved risk management, tech-driven analytics

Moody's, IQEQ

Aspect

Observations & Drivers

Platform Focus

Source

Demographics

Dominance of institutional investors including pension funds and private credit funds; reduction in bank holdings.

Shift away from traditional banks toward diversified portfolios.

SFA Research, S&P Global Latin America

Purchasing Patterns

Preference for structured products with diversified asset pools and advanced digital risk assessments.

Enhanced risk analytics via digital platforms and AI integration.

SFA Research Corner, Moody's

Aspect

Details

Impact

Source

Data Automation

Advanced machine learning algorithms automate data collection, cleaning, and processing.

Increases accuracy and reduces manual errors.

SmartDev

Advanced Forecasting

Continuous refinement of risk models using real-time indicators.

Enhances predictive accuracy in volatile markets.

SmartDev

Explainability (XAI)

Implementation of XAI techniques to justify model decisions.

Builds stakeholder trust and meets regulatory compliance.

Trinetix

Aspect

Details

Impact

Source

Process Streamlining

Digitizes recordkeeping and transaction operations using immutable ledgers and smart contracts.

Reduces costs and enhances transparency in the securitization lifecycle.

Deloitte US

Immutable Audit Trail

Provides tamper-proof records through decentralized ledger technology.

Simplifies regulatory reporting and builds investor confidence.

Deloitte US

Digital Platform

Features

Benefits

Source

Cloud-Based Integration

Consolidates disparate systems via APIs and cloud migration.

Enhances scalability, real-time data access, and process efficiency.

Finastra

Digital Lending Platforms

Incorporates AI for instant underwriting and fraud detection.

Accelerates lending processes and improves overall decision-making.

BPM

Indicator

Recent Data / Outlook

Key Details

Source

GDP Growth

Q4 2024: ~2.2%-2.3%; 2025: near or below 2%

U.S. GDP grew circa 2.2%-2.3% in Q4 2024 with potential slowdowns due to trade and fiscal uncertainties.

Reuters, Fannie Mae

Interest Rates

Current Fed funds at ~4.25%-4.5%; potential cuts anticipated

Gradual easing through modest cuts may lower rates to around 3.75%-4%.

Forbes, Morningstar

Inflation

Core inflation: ~2.1%-2.9%; target near 2%

Inflation remains above target but moderated as the Fed adjusts its policy.

CNBC, USInflationCalculator

Fed Policies

Easing cycle with data-dependent adjustments

Federal Reserve emphasizes transparent, gradual easing aligned with maximum employment and price stability.

Federal Reserve

Regulatory Change

Key Provisions

Implications for ABS

Implications for CLOs

Source

Corporate Transparency Act

Mandates comprehensive disclosure of beneficial ownership.

Increases diligence; potential issuance delays.

Additional disclosures required for sponsor entities.

Dechert Market Insights

Basel III Re-Proposal & Risk Retention

Requires originators to retain at least 5% of underlying assets.

Heightened analysis on asset quality and structuring processes.

Indirect effect via lender participation and capital adequacy.

Panoramic Structured Finance 2025

SEC’s Climate Disclosure & ESG Regulations

Enhanced ESG and climate risk disclosures mandated.

Integration of climate risk into ABS pricing and due diligence.

Additional transparency may affect ratings and investor appeal.

Dechert Market Insights

Initiative

Description

Impact on Market Strategies

Source

Green Securitisation

Issuance of green bonds, sustainability-linked bonds, and other ESG-oriented securities.

Attracts ESG-focused investors and channels capital to renewable projects.

Sustainability Magazine

Climate Transition Finance

Structured products incorporating climate adaptation and decarbonization metrics.

Addresses climate risks while supporting policy-driven transition plans.

S&P Global ESG Trends

Product/Innovation

Description

Sustainability & Transparency Features

Source

Green Bonds & Green Loans

Debt instruments targeting eco-friendly projects with strict use-of-proceeds requirements.

Clear reporting, third-party certifications, and alignment with TCFD standards.

Arbor.eco

Company

Market Position

Strengths

Weaknesses

Strategic Initiatives

State Street

Leading global custodian with strong asset management

Global network, robust asset management reputation

Awaiting full regulatory approvals

Collaboration with Apollo Global Securities for a larger-scale CLO product Pitchbook

Apollo Global Securities

Structured finance specialist with deep market expertise

Expertise and strong partner alliances

Exposure to regulatory delays

Joint venture with State Street to develop advanced CLO products Pitchbook

Category

Key Entities/Examples

Role in Market

Strategic Focus

Issuers

Banks, asset managers, specialty finance companies

Origination of deals

Focus on credit resilience and sustainable income generation

Investors

Pension funds, insurance companies, retail via ETFs

Capital funding and yield generation

Seeking stable, diversified cash flows

Intermediaries

Rating agencies, advisory firms, data platforms

Market facilitation and transparency

Consolidating pricing and issuance activities

Segment Type

Description

Examples & High-Growth Areas

Emerging Regions/Notes

Traditional Asset-Backed Products

Established securitizations (e.g., mortgage, auto, consumer loans)

Mortgage-backed securities, consumer ABS

Mature markets; stable returns in developed economies

Non-Traditional Asset-Backed Products

Innovative financing solutions (e.g., digital infrastructure, net lease)

Data centers, real estate credit securitizations

High-growth in tech-driven and emerging sectors

Institutional Asset-Backed Products

Large-scale, bespoke structures for institutional investors

Securitizations of corporate assets and commercial real estate loans

Global reach; expanding in regions such as Europe and Asia

Investment Type

Trend/Observation

Impact on Issuance and Funding

Data/Examples

Source

Institutional Investment

Consistent funding from banks and financial entities

Steady ABS and CLO issuance through refinancing

U.S. ABS reached €43B in 2024; CLO new issuance at US$202B

S&P Global Ratings, Nuveen

Private Equity & Venture Capital

Increasing deployment of dry powder and focus on digital infrastructures

Supports issuance growth and innovative structuring

Rise in private loan securitizations and middle-market CLOs

Deutsche Bank, Lexology

Trend

Key Characteristics

Examples/Integration

Source

Digitized Value Chain

Full digital integration from origination to servicing

IntainMARKETS platform combining multiple processes Medium

Medium

AI-Driven Automation

Continuous R&D in AI for underwriting and risk analytics

Investments in AI powering process automation

Medium

KPI

Definition

Measurement & Calculation

Relevance

Issuance Volume

Total amount of ABS/CLOs issued in a given period

Sum of new securitizations (e.g., reported in USD or EUR)

Indicates market activity and investor appetite.

Default Rates

Percentage of defaults within the structured portfolio

(Defaults / Total issues) x 100

Reflects credit quality and risk management efficacy.

Liquidity Trends

Ease of trading ABS/CLOs (bid-ask spreads and volume)

Analysis of bid-ask spreads and turnover data

Helps assess market efficiency and pricing dynamics.

KPI

Definition

Measurement Example Data

Relevance

Collateral Performance

Quality of underlying assets

Asset upgrade counts, stable utilization measures

Critical for securitization performance

Refinancing and ARD Risk

Frequency and conditions of refinancing events

Number of securities facing upcoming mandatory adjustments

Forecasts potential stress factors

Framework

Key Components

Application in Structured Finance

Source

SWOT

Strengths, Weaknesses, Opportunities, Threats

Evaluates internal capabilities and external market risks in deal structuring.

Investopedia

PESTEL

Political, Economic, Sociocultural, Technological, Environmental, Legal

Assesses macro drivers such as regulatory shifts and economic trends.

CIPD

TAM/SAM/SOM

Total, Serviceable, and Obtainable Market

Quantifies market potential for new securitizations and structured products

Rho

Source Name

Type

Focus/Details

URL

S&P Global Structured Finance Outlook

Industry Report

Provides comprehensive data on ABS and CLO trends in the US and Canada.

Link

Moody's Global Structured Finance Outlook

Industry Report

Analysis of macroeconomic impacts and refinancing activity affecting structured assets.

Link

FDIC – Enhancing Transparency in Structured Finance Market

Government Source

Data on disclosures and risk management relevant to ABS and underlying assets.

Link

Factor

Impact & Drivers

Forecast Implications

Source(s)

Technological Advancements

Enhanced analytics and digital underwriting improve structuring and risk management.

Support for niche ABS segments and more efficient CLO pricing.

S&P Global, Moody's

Economic Drivers

Steady economic recovery and moderate interest rate declines.

Moderate growth in issuance volumes, supported by improved refinancing conditions.

Moody's, Janus Henderson

Regulatory Changes

Gradual and predictable updates in risk retention and ESG disclosure requirements.

A balanced issuance environment with steady refinancings and slight modifications in capital rules.

Market Research Future

Scenario

Interest Rate Environment

Key Impact Factors

Expected Market Response

Base Case

Gradual decline from ~4.4% to ~3.4% (Federal Reserve)

Moderate refinancing challenges; stable asset values.

Steady issuance; standard refinancing and stable asset performance.

Pessimistic

Higher persistent rates with limited cuts

Elevated refinancing challenges and higher capital costs.

Subdued issuance volumes; potential rating downgrades, particularly in sensitive sectors.

Optimistic

Faster normalization with lower short-term rates

Improved refinancing, increased investor appetite for floating rate assets.

Record or near-record CLO issuance; expansion in ABS through improved pricing transparency.

Scenario

Inflation Outlook

Key Impact Factors

Expected Impact on Transactions

Base Case

2.1% to 2.8% as forecasted (Fannie Mae)

Balanced consumer credit and moderate spread pressures.

Stable credit performance with steady ABS demand.

Pessimistic

Sustained inflation above 3%

Eroded consumer finances; higher operating costs.

Increased delinquencies and wider spreads.

Optimistic

Faster alignment to 2%

Favorable refinancing conditions; improved balance sheets.

Stable to improved asset performance across portfolios.

Scenario

Regulatory Environment

Key Considerations

Expected Market Impact

Base Case

Continuation of current frameworks with gradual updates (KPMG)

Current risk retention and supervisory norms.

Stable transaction structuring with minor adjustments in risk weights.

Pessimistic

Accelerated tightening with higher capital charges

More stringent risk retention and increased capital requirements.

Higher refinancing challenges and reduction in issuance volumes.

Optimistic

Harmonized and predictable regulatory updates

Clear guidelines and beneficial adjustments in capital calculations.

Enhanced transaction flexibility and potential growth in issuance and refinancing activity.

Variable

Base Trend

Pessimistic Impact

Optimistic Impact

Interest Rate Levels

Declining from ~4.4% to ~3.4%

Elevated rates causing tighter refinancing

Faster normalization and lower borrowing costs

Inflation Rate

Between 2.1% and 2.8%

Sustained inflation over 3%

Convergence toward 2%, stabilized asset pricing

Regulatory Stringency

Gradual, predictable updates

Accelerated tightening with higher risk weights

Harmonized, transparent regulation

Recommendation

Action Items

Considerations

Source

Diversify Exposure with Tech-Enabled Assets

Allocate funds to ABS/CLO products leveraging advanced digital platforms and AI.

Mitigate concentration risk by using diversified innovations.

Morgan Stanley

Assess Cyber Risk and Systemic Vulnerabilities

Regularly review portfolio assets exposed to cyber threats; engage fintech risk experts.

Cybersecurity risks can significantly impact returns.

S&P Global

Monitor Global and Geopolitical Shifts

Utilize scenario stress tests and sensitivity analyses to adjust portfolio strategies.

Geopolitical uncertainty often affects liquidity and pricing dynamics.

Morgan Stanley

Recommendation

Action Items

Considerations

Source

Embrace Integrated Digital Platforms

Invest in unified platforms combining Web 2.0 and Web 3.0 capabilities (e.g., IntainMARKETS).

Enhances operational efficiency and improves market access.

Medium

Strengthen Cybersecurity and Risk Management

Upgrade cybersecurity protocols and perform regular cyber stress tests.

Critical to safeguard digital transformation investments.

S&P Global

Ramp Up Digital Transformation Investments

Increase investment in AI, blockchain, and automation to optimize internal processes and customer interfaces.

Reduces fragmentation and fosters scale efficiencies.

Medium

Recommendation

Action Items

Considerations

Source

Update Regulatory Frameworks

Implement technology-neutral standards that support digital innovation in structured finance.

Balance innovation with robust systemic risk oversight.

MayerBrown

Enhance Cyber Resilience Policies

Mandate rigorous cyber stress testing and vulnerability assessments within the financial sector.

Digitalization increases exposure to cyber risks.

S&P Global

Foster Collaboration with FinTechs

Establish regular forums for dialogue between regulators, banks, and fintech firms.

Promotes alignment and helps mitigate risks stemming from rapid innovation.

Morgan Stanley

Trend Category

Key Developments

Data/Examples

Source

Asset-Backed Securities (ABS)

Renewed activity in CMBS, RMBS, auto, consumer, solar, renewable energy, and utility sectors.

Significant growth in ABS market in 2024; potential for CMBS issuance to exceed $110B in 2025 ²

Dechert Report, S&P Global

Collateralized Loan Obligations (CLOs)

Record issuance activity leading up to 2024 with bullish outlook into 2025; strengthened defaults profile due to refinancing improvements.

Over $200B in issuance recorded in 2024; projections remain strong with continued market entry of new players ²

Dechert Report, Moody's

Development Aspect

Description

Specific Data/Patterns

Source

Regulatory Environment

Increased focus on compliance and transparency with legislative adjustments, including the Corporate Transparency Act and ESG disclosure regulations.

New entities subject to timely disclosure requirements; regulatory updates influencing structure of future issuances.

Dechert Report

Market Growth & Sentiment

The structured finance market is buoyed by easing inflation and stable refinancing activity; resilient investor appetite across sectors.

CLO defaults projected to decline; ABS market expected to grow robustly in 2025 ²

Moody's

New Market Entrants

Entry of new players diversifying the portfolio base and introducing innovative structures in both ABS and CLO markets.

Record issuance in CLOs, exceeding $200B; heightened investor interest driven by diversified asset pools.

Dechert Report

Asset Performance

Improvement in asset quality through enhanced servicing and strategic management; lower default rates observed compared to other credit sectors.

CLOs reported near-zero defaults during crisis periods (e.g., 2020) compared to elevated defaults in high-yield corporate bonds.

Guggenheim

Disruptive Change

Impact on ABS/CLO Market

Key Insights/Case Studies

Source

Digitalization & Data Use

Increased integration of data analytics to optimize credit assessments and facilitate faster securitization processes.

Firms leveraging big data and advanced IT to improve asset tracking and risk management in ABS portfolios.

IQEQ Insights

Regulatory-Driven Restructuring

Restructuring of transaction processes in response to tighter regulations has driven innovative ABS structures and stimulated CLO markets.

Adaptation strategies include alignment with Basel III re-proposal and the SEC's climate disclosure rules.

Dechert Report

Market Disruption

Evolving market conditions, including fluctuations in interest rates and refinancing challenges, are recalibrating risk assessment models.

Shifts in collateral performance with improved historical data models; CLOs adapting to cyclical bank lending scenarios.

Moody's

Sector

2024 Highlights

2025 Outlook

Source

ABS

Growth driven by CMBS activity, new market entrants and lower inflation improving transaction fundamentals.

Continued robust growth with further potential for CMBS issuance surpassing $110B.

Dechert Report, S&P Global

CLOs

Record issuance exceeding $200B; robust asset performance with minimal defaults noted during economic stress periods.

Bullish outlook with declining default rates and strong refinancing activity, buoyed by new market participants.

Dechert Report, Moody's

Sector

Observed Trend

Financial/Volume Data

Driving Factors

Source

ABS

Increased activity in niche segments such as auto-related and equipment ABS; strong investor appetite driven by liquidity needs.

In Latin America, equipment ABS is the most active asset class in Mexico; auto lease ABS up by 30% (as reported).

Higher yields, diversification, and digital advances; sustainability disclosures lower cost of capital.

iqeq, S&P Global

CLOs

Stable to growing investor demand with increasing participation by private credit and institutional funds; observed decline in defaults supports confidence.

Middle market CLOs remain a large share of new US issuance; decline in collateral defaults expected in US and Europe.

Improved risk management, technological innovations in risk assessment (AI, digital platforms), and competitive yield profiles.

Moody's, iqeq

Aspect

Observations

Details/Drivers

Source

Demographics

Dominance of institutional investors such as insurance companies, pension funds, and private credit funds.

Shift from bank-led transactions: banks reduced ABS holdings from $121B in 2021 to $91B by mid-2024; increased allocation in private credit funds.

SFA Research, S&P Global Latin America

Psychographics

Growing appetite for transparency, sustainable practices, and tech-enabled risk assessment.

Investors are increasingly driven by ESG and sustainability criteria, digital reporting, and improved data accuracy available through fintech innovations.

iqeq, Moody's

Feature

ABS Purchasing Patterns

CLO Purchasing Patterns

Influencing Factors

Source

Liquidity & Diversification

Preference for structured products with diversified asset pools; robust issuance growth in auto-related and consumer sectors.

Purchasers focused on collateral quality, tranche structure, and improving default performance; stable demand amid lower defaults.

Enhanced underwriting standards; regulatory changes; investor targeting of resilient and diversified portfolios.

SFA Research Corner, Moody's

Tech-Driven Decision Making

Increasing use of digital platforms for real-time information, automated risk analytics, and improved investor reporting.

Rising integration of AI, machine learning, and automation in evaluating structured finance vehicles, reducing reliance on traditional metrics.

Digitization in structured finance enabling enhanced risk management and faster reaction to market dynamics.

iqeq

Category

Key Shifts & Focus Areas

Institutional Demand

Increased activity in specific ABS segments; stable or growing demand in CLOs driven by lower default expectations and risk improvements.

Investor Demographics

Growing participation of institutional investors, particularly private credit funds, with a downward trend in traditional bank holdings.

Investor Psychographics

Focus on ESG, tech-enabled analysis, and transparency; a strategic shift towards structured products with diversified, high-quality asset pools.

Purchasing Patterns

Investors are increasingly selecting products based on digital risk assessments, flexible tranche structures, and the long-term reliability of returns.

Technology Influence

Description

Key Features & Impacts

Citations

AI-driven Risk Modeling

The use of advanced machine learning and rule-based algorithms to generate real-time predictive models and dynamic risk assessments.

• Automates data collection, cleaning and processing. • Enhances forecasting accuracy by detecting complex patterns. • Integrates explainable AI (XAI) for transparency and regulatory compliance. • Enables self-learning and adaptive risk management often integrated with blockchain.

SmartDev Trinetix

Blockchain in Securitization

The adoption of distributed ledger technology to digitize and streamline the securitization lifecycle, improving data integrity and transparency.

• Establishes a single source of truth through immutable audit trails and smart contracts. • Lowers transaction and integration costs.• Enhances transparency and regulatory compliance by securely tracking asset performance and fund flows.• Mitigates risks via decentralized data management.

Deloitte US

Digital Platforms & Integrated Solutions

Use of cloud-based and interoperable digital platforms that consolidate disparate systems and workflows in structured finance.

• Improves end-to-end workflow efficiency (e.g., digital lending platforms, automated underwriting, and integrated risk management systems).• Leverages open APIs and cloud transformation for faster deployment and scalability.• Supports interconnected ecosystems via digital interfaces, enhancing operational transparency and lowering human error.

Finastra BPM

Aspect

Details

Impact

Citation

Data Automation

AI tools scrape, clean, and structure data from various sources automatically.

Reduces manual errors and speeds up model preparation.

SmartDev

Advanced Forecasting

Machine learning algorithms continuously refine predictions based on real-time economic indicators.

Enhances accuracy and responsiveness of risk models in volatile markets.

SmartDev

Explainability (XAI)

Techniques like SHAP and LIME provide justification for model decisions.

Improves stakeholder trust and aids compliance with regulatory frameworks.

Trinetix

Integration with Blockchain

AI models are increasingly being linked with blockchain data ensuring tamper-proof records.

Combines real-time risk analytics with secure, immutable data tracking.

SmartDev

Aspect

Details

Impact

Citation

Process Streamlining

Blockchain enables consolidation of processes across originators, servicers, and investors by digitizing recordkeeping and transaction flows.

Lowers costs, reduces delays, and enhances efficiency along the securitization lifecycle.

Deloitte US

Immutable Audit Trail

All changes are recorded permanently on a shared ledger.

Enhances transparency and simplifies regulatory reporting by providing a single source of verifiable data.

Deloitte US

Smart Contract Automation

Digital contracts automatically trigger actions when predefined conditions are met.

Expedites transactions such as loan approvals, revenue-sharing, and risk rebalancing while reducing human errors.

Deloitte US

Enhanced Data Security

Decentralized storage mitigates single points of failure and unauthorized alterations.

Builds investor confidence and reduces systemic risk in structured finance transactions.

Deloitte US

Digital Platform

Features

Benefits

Citation

Cloud-based Integration

Platforms leveraging open APIs, cloud migration, and automated workflows.

Enhances scalability, provides real-time data access, and simplifies integration across different systems.

Finastra

Digital Lending Platforms

Tools powered by AI and digital risk analytics; often feature instant underwriting and fraud detection capabilities.

Accelerates the lending process, reduces turnaround times, and supports informed decision-making in high-speed markets.

BPM

Interoperable Ecosystems

Integration solutions that connect legacy systems with modern digital applications via standardized protocols and APIs.

Facilitates end-to-end transparency, reduces operational silos, and optimizes workflow efficiency across structured finance operations.

Finastra

Key Element

Digital Tool/Service

Benefits

Citation

Process Automation

AI & Automated Coding Solutions

Streamlines value chain digitization; reduces manual intervention and operational costs

Intain Article

Unified Digital Platforms

Integrated SaaS (e.g., IntainMARKETS)

Seamless connectivity between multiple process steps, reducing integration complexity

Intain Article

Regulatory Compliance

Data Analytics and Digital Reporting

Enhances risk management and ensures adherence to evolving financial regulations

Deloitte

Key Aspect

Digital Tool/Service

Benefits

Citation

Personalized Experiences

AI-Driven Data Analytics & CRM

Customizes financial products; increases customer loyalty by addressing individual needs

Capgemini Report

Omnichannel Interactions

Mobile Banking, Online Portals, Chatbots

24/7 accessibility; integrated interactions across digital and physical channels

Accenture

Seamless Integration

Web 2.0/3.0 Connectivity Platforms

Enhances customer experience by unifying disparate systems and data streams

Intain Article

Competitive Factor

Digital Tool/Service

Benefits

Citation

Cost Efficiency

End-to-End Digital Platforms

Consolidates systems, reduces vendor fragmentation, and lowers integration costs

Intain Article

Agile Market Response

Integrated Analytics & AI

Accelerates decision-making and responsiveness to market changes, strengthening competitive edge

Deloitte

Innovation Leadership

Advanced Technologies (Blockchain, Cloud, IoT)

Drives new product development and service models that set market leaders apart

Capgemini Report

Aspect

Impact Summary

Operations

Automation, streamlined processes, and integrated platforms lower costs and improve efficiency.

Customer Engagement

Enhanced personalization, omnichannel interactions, and seamless connectivity increase loyalty.

Competitive Positioning

Consolidated digital ecosystems, agile responses, and technology-led innovations bolster market leadership.

Technology

Impact Category

Description

Data/Financial Insights

Citation

AI

Risk Analytics & Efficiency

Immediate improvements in data processing, underwriting efficiency, and risk analytics. Increased demand for data center capacity supports financing structures tied to technology-catalyzed sectors.

Data center demand is accelerating with AI deployments (S&P Global Ratings)

S&P Global Ratings

IoT

Real-Time Asset Tracking

IoT enables real-time asset tracking and predictive maintenance, reducing unplanned downtime and lowering operational costs. This creates operational efficiencies in underlying collateral assets.

Predictive maintenance can reduce downtime by up to 50% and maintenance costs by around 25% (RFID Journal)

RFID Journal

Blockchain

Process Efficiency & Transparency

Adoption of blockchain enhances transparency in issuance processes, reduces manual intervention, slashes issuance costs, and improves trade efficiency. Early evidence shows yield spread reductions in ABS deals.

Blockchain adoption in China reduced yield spreads by approximately 25 basis points (BIS Working Paper)

BIS Working Paper

Technology

Impact Category

Description

Data/Financial Insights

Citation

AI

Enhanced Predictive Underwriting

AI will drive robust predictive modeling and real-time risk monitoring, enabling dynamic credit risk assessment and improved portfolio management for both ABS and CLO structures over time.

Continuous AI integration is seen as pivotal for future credit quality and valuation improvements in tech-driven sectors (DWS Group)

DWS Group

IoT

Integrated Asset Performance

Long-term IoT integration will offer granular, continuous monitoring of asset performance, enabling better risk differentiation, enhanced transparency, and improved liquidity management in securitized products.

IoT-driven asset intelligence contributes to operational efficiency, critical in structured finance (Cogent Infotech)

Cogent Infotech

Blockchain

Tokenization & Market Democratization

Blockchain is poised to transform ABS and CLO markets by enabling tokenization of assets, lowering collateral illiquidity, and democratizing access to investment opportunities. In the long run, it may foster secondary market development and reduce transaction costs significantly.

Tokenization can boost liquidity by up to 50% for tokenized properties and reduce transaction costs by 30% (LinkedIn Article)

LinkedIn Article

Factor

Short-Term Effect

Long-Term Effect

Enhanced Operational Efficiency

AI improves analytics; IoT enhances asset tracking; Blockchain optimizes issuance processes.

Automation in risk assessment, underwriting, and collateral monitoring becomes the industry norm.

Market Transparency

Blockchain adoption increases clarity and reduces errors in transactions.

Immutable ledgers foster investor trust, broaden market participation, and support secondary market growth.

Liquidity and Cost Management

Early yield spread reductions in blockchain-enabled ABS.

Tokenization and real-time monitoring are expected to lower costs and boost liquidity across ABS and CLO markets.

Trend

Description

Examples / References

ESG and Sustainability

Increasing demand for ethical investments, with a focus on environmental impact, social responsibility, and governance.

ESG integration as seen in wealth management trends The Guardian

Digital Integration

Adoption of advanced digital tools, AI, and decentralized systems drives investor expectations for seamless and transparent platforms.

Integration of Web 2.0 with Web 3.0 in automated platforms Intain

Demographic Shifts

Aging populations and emerging tech-savvy younger cohorts require innovative structured finance products tailored to longevity and modern financial needs.

Longevity themes as observed by Morgan Stanley Morgan Stanley

Ethical and Transparent Values

Investors place higher importance on transparency, regulatory oversight, and alignment of investments with societal values, driving new product innovations.

Cultural shift toward ethical investing influences asset structuring Forbes

Impact

Description

Implications on Structured Finance Sector

Product Innovation

Structured finance products are evolving to embed digital capabilities and align with ESG criteria.

Increased issuance of sustainable asset-backed securities and hybrid financing models Capgemini

Increased Transparency

Increased demand for clarity in the underlying assets and risk profiles has led to digital integration and automated process management.

Platforms now offer end-to-end digitization, reducing reliance on multiple siloed systems Intain

Market Segmentation & Diversification

Demographic trends require tailoring products to meet distinct investor profiles, including high net-worth individuals and retail investors.

Customization of financing deals to cater for diverse income and risk profiles; integration of alternative asset classes for diversification Morgan Stanley

Regulatory and Ethical Alignments

Cultural shifts pressure markets to reflect stronger compliance frameworks and ethical considerations in risk structuring.

Enhanced disclosure practices and integration of ESG metrics into credit assessments, fostering investor confidence TIE to wealth management trends

Key Aspect

Details

Societal Values

Emphasis on ESG, transparency, and ethical investing.

Investor Preferences

Demand digital, integrated platforms and customized finance solutions.

Structured Finance Impact

Evolution into sustainable, digitally enabled products with increased transparency and segmentation.

Indicator

Recent Data / Outlook

Key Details

Source URL

GDP Growth

Q4 2024: ~2.2%-2.3%; 2025: near or below 2%

U.S. GDP grew around 2.2%-2.3% in Q4 2024. Some forecasts (e.g., Reuters, Vanguard) expect 2025 growth to slow, partly due to trade and fiscal policy uncertainties.

Reuters, Fannie Mae

Interest Rates

Current Fed Funds Rate: ~4.25%-4.5%; potential cuts planned

The Fed has eased rates gradually (e.g., two 25bps cuts expected), implying a modest reduction to around 3.75%-4% by year-end. Projections vary, with some forecasts indicating minimal rate change in early 2025.

Forbes, Morningstar

Inflation

Core inflation: ~2.1%-2.9%; target near 2%

Inflation (measured via core PCE among other indices) remains above the Fed’s 2% target in the near term, but is expected to moderate as monetary policy adjusts.

CNBC, USInflationCalculator

Fed Policies

Easing cycle with cautious approach

The FOMC reaffirms its commitment to maximum employment and price stability. Policy adjustments are data-dependent with a focus on anchoring inflation expectations; more integrated communication advises a gradual easing strategy.

Federal Reserve

Economic Factor

Impact on ABS Market

Impact on CLOs Market

Notes

Slower GDP Growth

Reduced consumer spending may increase delinquencies in auto and RMBS ABS.

A slowdown may affect borrower credit performance and collateral quality; however, robust corporate fundamentals can sustain CLO performance.

Consumer credit dynamics are sensitive to economic slowdown (Moody’s).

Modest Interest Rate Cuts

Lower rates can narrow yield spreads; however, floating and fixed-rate ABS may face prepayment/extension risks.

CLO yields, being largely floating rate, remain attractive if rate cuts are moderate; however, steep yield curves could pressure spreads.

Structured products are highly sensitive to interest rate environments (CNBC).

Inflation Moderation

Stable inflation assists in predicting cash flows for mortgage and consumer ABS; high inflation could hurt performance if consumer debt service deteriorates.

Improved planning with anchored inflation assists managers in selecting and actively managing loans within CLOs.

Steady inflation supports asset pricing; however, persistent inflation could affect underlying loan performance (USInflationCalculator).

Fed Policy Communication

Clear monetary guidance reduces market uncertainty, benefiting pricing and performance of ABS tranches.

Stability in policy aids CLO managers’ ability to actively manage tranches and forecasts; uncertainty could lead to conservative structuring.

Transparency from the Fed and data-dependent decisions are crucial (Federal Reserve).

Structured Product

Key Characteristics

Impact of Economic Conditions

Additional Trends

Asset-Backed Securities (ABS)

Secured by loans (e.g., auto, mortgage, consumer credit); cash flow dependent on underlying borrower performance

Sensitive to GDP slowdown and consumer debt stress. Higher interest rates might increase default risk, while lower rates can enhance refinancing options.

Performance of RMBS ABS is sensitive to mortgage rates; consumer ABS may be pressured if spending declines (S&P Global).

Collateralized Loan Obligations (CLOs)

Pool leveraged loans; actively managed with multiple tranches; spreads tied to credit environment

Robust corporate credit quality supports CLO performance. Moderate rate cuts are beneficial, but uncertainty in rate path may tighten spreads.

Rising investor appetite (including growth in ETFs) has broadened retail participation; active management remains key in mitigating risks (Deutsche Bank).

Regulatory Change

Key Provisions/Focus

Implications for ABS Issuance

Implications for CLO Issuance

Compliance & Regulatory Scrutiny Details

Reference

Corporate Transparency Act

Mandates disclosure of beneficial ownership; 30-day compliance period for newly formed entities from January 2025

Increases due diligence requirements; may delay issuance due to enhanced transparency measures and verification of ownership

May require additional disclosures for sponsor entities structuring CLOs, influencing documentation and investor communications

Heightened focus on transparency and data accuracy; requires robust reporting systems and internal controls

Dechert Market Insights

Basel III Re-Proposal & Risk Retention Requirements

Emphasis on originator risk retention (e.g., retaining at least 5% of the underlying assets); adjustments in capital requirements

Tightening of risk retention rules increases compliance cost; heightened scrutiny over asset quality and structuring practices to meet risk retention norms

Although more indirectly related, tighter capital requirements may affect CLO structuring by influencing lender participation and credit enhancement strategies

Increased regulatory review of securitisation structures, ensuring that exposure and hedging strategies comply with more stringent guidelines

Panoramic Structured Finance 2025

SEC’s Climate Disclosure & ESG Regulations

Enhanced disclosure requirements for climate-related risks and ESG factors affecting underlying assets

May impact pricing and investor risk assessments; requires integration of ESG factors and climate risk analysis into ABS documentation

Could necessitate additional transparency on portfolio sustainability or underlying asset quality, influencing credit ratings and investor appeal

Regulatory oversight intensifies as agencies demand detailed risk disclosures and standardized reporting, promoting consistency and accountability

Dechert Market Insights

Change Type

Key Impact

Affected Sectors

Corporate Transparency Act

Increased disclosure, due diligence procedures

ABS and indirectly CLO sponsors

Basel III & Risk Retention Requirements

Stringent capital and retention mandates

ABS structuring; indirect CLO structuring

SEC Climate & ESG Disclosures

Enhanced risk assessment and sustainability reporting

Both ABS and CLO markets

Initiative

Description

Impact on Market Strategies

References

Green Securitization

Issuance of green bonds, sustainability-linked bonds, and other structured products tied to ESG metrics.

Improves transparency, attracts ESG-focused investors, and channels capital towards renewable projects.

Sustainability Magazine ESG Matrix News

Climate Transition Finance

Structured products incorporating metrics from climate adaptation and decarbonization efforts (e.g., catastrophe bonds, climate-linked securities).

Enhances resilience of investments by addressing climate-related risks and supporting policy-driven transition plans.

S&P Global ESG Trends

Practice

Description

Market Impact

Key Drivers

Integration of ESG Analysis

Adoption of advanced data analytics (AI, NLP) for real-time ESG assessment and screening for greenwashing.

Leads to more accurate risk pricing, better asset management, and informed investment decisions in structured finance products.

Technological innovation; Regulatory pressures (SigmaEarth)

Eco-friendly Supply Chain Measures

Adoption of sustainable supply chain practices and transparency in emissions data, including indirect (Scope 3) reporting.

Increases investor confidence and meets rising regulatory and market disclosure expectations.

Growing demand for transparency and regulatory mandates (Aligned Incentives)

Focus Area

Description

Structured Finance Implications

References

Standardization & Taxonomies

Development of uniform guidelines and taxonomies (e.g., ICMA, EU Green Bond Standard) for sustainability disclosures.

Improves comparability, mitigates greenwashing risks, and standardizes performance metrics across securitized products.

KPMG The Sustainable Finance Imperative

Enhanced Disclosure Frameworks

Implementation of regulations (e.g., ISSB-aligned, CDP reporting) mandating comprehensive ESG and climate risk disclosures.

Forces structured finance products to integrate environmental risk data, thereby reducing uncertainty and enhancing market stability.

Aligned Incentives

Key Trend

Description

Example

Market Impact

Green Securitization

Issuance of structured financial products tied to environmental outcomes and ESG benchmarks.

EU Green Bond Standard

Drives capital allocation toward environmentally sustainable projects and increases investor trust through measurable criteria.

ESG & AI Integration

Leveraging data analytics to monitor ESG compliance and reduce greenwashing risks.

AI-driven ESG assessments

Enhances decision-making, reduces uncertainties in credit/risk ratings, and improves overall asset performance.

Climate Transition Focus

Financing products that utilize performance indicators related to decarbonization and adaptation.

Sustainability-linked loans, catastrophe bonds

Aligns financing strategies with global net-zero targets, increasing the competitiveness of structured finance products in a low-carbon economy.

Regulatory Alignment

Adoption of coordinated standards and reporting frameworks for sustainability disclosures.

ISSB, ICMA guidelines

Provides consistency in performance measurement and disclosure, thereby enhancing market transparency and reducing investment risks.

Risk Category

Description

Relevant Data/Observations

Credit Volatility

Variability in borrower credit performance impacting contractual cash flows.

ABS ratings rely solely on cash flows from underlying assets; overreliance on rating agencies may overlook real credit deterioration Guggenheim.

Market Instability

Fluctuations in market conditions and valuation shocks affecting liquidity and pricing of ABS/CLO tranches.

Studies indicate that volatile interest rate environments and market sentiment can influence refinancing risk and index performance S&P Global Ratings; market conditions also impact investor appetite in CLO deals Wilmington Trust.

Supply Chain Disruptions

Interruptions caused by geopolitical tensions, extreme weather events, and climate-related natural disasters.

Extreme weather has affected real estate and insurance-linked ABS performance; disruptions in global supply chains (e.g., delays in aircraft deliveries, increased shipping times) have been noted ESMA.

Regulatory Risks

Increased scrutiny, evolving compliance frameworks, and risk retention requirements impacting deal structures and operations.

Regulatory pressure shaping risk retention and compliance has been affecting CLO deals; initiatives such as DORA in the EU seek to enhance digital resilience ESMA; risk mitigation including reporting and oversight is critical SIFMA.

Mitigation Strategy

Application Area

Key Actions/Measures

Enhanced Credit Analysis

Credit Volatility

Perform rigorous due diligence, incorporate independent assessments beyond conventional ratings, and continuously monitor cash flows. Guggenheim

Portfolio Diversification

Market Instability and Credit Volatility

Diversify asset pools and conduct stress testing across scenarios to absorb shocks from market fluctuations. Moody's

Active Portfolio Management

Overall Risk Mitigation

Employ robust management techniques to reinvest proceeds and adjust asset compositions, mitigating refinancing and liquidity risks. Guggenheim

Supply Chain Risk Planning

Supply Chain Disruptions

Monitor geopolitical and environmental signals; build flexibility into asset sourcing to counteract supply delays and disruptions. ESMA

Regulatory Compliance Framework

Regulatory Risks

Establish comprehensive compliance programs, ensure stringent risk retention, and update internal controls in line with evolving regulations like DORA. SIFMA

Risk Category

Key Risk Factor

Mitigation Strategy

Credit Volatility

Fluctuating borrower credit performance

Rigorous credit analysis, enhanced due diligence

Market Instability

Volatile market conditions affecting asset values

Diversification across stress-tested scenarios, active management

Supply Chain Disruptions

Disruptions due to geopolitical/climate events

Proactive monitoring and asset sourcing flexibility

Regulatory Risks

Evolving regulatory compliance demands

Robust internal controls and comprehensive compliance programs

Segment Type

Description

Examples & High-Growth Areas

Emerging Regions/Notes

Traditional Asset-Backed Products

Securitizations based on established cash flows such as mortgage loans, auto loans, and consumer credit.

Mortgage-backed securities; consumer lending asset pools

Well-established in developed markets; stable returns in mature economies Chambers and Partners

Non-Traditional Asset-Backed Products

Innovative financing solutions outside conventional consumer or mortgage loans that capture alternative revenue streams.

Digital infrastructure (data centers); net lease industry; real estate credit

High-growth sectors benefiting from technological infrastructure and evolving tenant profiles, especially in digital & real estate markets Blue Owl Capital

Institutional Asset-Backed Products

Structures targeting large-scale transactions for institutional investors, often with bespoke financing solutions and sophisticated risk profiles.

Private debt capital for commercial real estate; securitizations of corporate assets

Focus on large-scale and scalable transactions; opportunities in global and emerging markets JP Morgan

Feature

Traditional Asset-Backed Products

Non-Traditional Asset-Backed Products

Underlying Assets

Standardized, proven revenue streams (e.g., mortgage loans, consumer credit)

Innovative or niche asset classes (e.g., data centers, digital infrastructure)

Risk & Return Profile

Lower risk profile with predictable cash flows

Potential for higher yields; influenced by rapid sector evolution especially in tech and real estate markets

Investor Base

Institutional investors seeking stability and liquidity

Investors looking for growth and diversification through alternative financing vehicles

Market Maturity

Mature in developed markets with longstanding regulatory frameworks

Emerging in regions with evolving regulatory landscapes and infrastructure needs

Sector/Market

Characteristics

Key Drivers & Trends

Representative Products or Financing Solutions

Digital Infrastructure

Financing for data centers, digital assets, and network facilities

Rising demand from cloud services, AI, and data consumption

Scaled financing solutions; bespoke debt instruments tailored for digital transformation

Real Estate Credit

Credit solutions for commercial real estate under tighter conventional banking provisions

Reduced bank lending; demand for private debt due to higher interest rates

Private debt capital for refinancing; securitized real estate loans

Net Lease and Corporate Credit

Focus on stable, income-yielding assets especially in asset-light sectors

Corporate monetization and liquidity needs; robust pipeline for securitization

Securitized net lease portfolios; institutional-backed leasing products

Region or Market

Characteristics

Investment Themes & Opportunities

Examples/Notes

Europe

Lower competition compared to the US in niche sectors such as real estate and data centers

Strong cross-border partnerships; emerging monetization of overseas assets

Increased opportunities in real estate credit and digital infrastructure Blue Owl Capital

Emerging Markets (Asia, Latin America)

Heterogeneous markets with underpenetrated asset classes, driven by structural growth

Attractive valuation gaps; growth in fintech, infrastructure and education assets

Regions like India with regulatory tailwinds; Latin America with niche names like Cenergy and rising fintech opportunities East Capital

Category

Key Potential

Considerations

Traditional

Stability, predictable income, regulatory familiarity

Lower yields; slower growth compared to innovation-driven segments

Non-Traditional

Higher yield, innovation potential, exposure to fast-growing markets

Requires bespoke structuring; higher complexity and potential volatility

Institutional

Scalability, access to large liquidity pools, customization

Demands advanced risk management and often longer lock-in periods

Company

Market Position

Strengths

Weaknesses

Strategic Initiatives

State Street

Leading global custodian actively entering structured credit via joint products with key partners

Global distribution network, strong reputation in asset management

Regulatory approval pending for new joint vehicle

Collaborating with Apollo Global Securities to launch a larger-scale CLO product awaiting SEC approval Pitchbook

Apollo Global Securities

Established structured credit specialist working in tandem with major custodians

Deep market expertise in structured finance and strong partner alliances

Exposed to delays and regulatory uncertainty

Joint venture with State Street to develop an advanced CLO product as part of a broader market strategy Pitchbook

BondBloxx

Emerging CLO ETF innovator focusing on private credit strategies

Innovative approach, early mover in launching CLO ETFs centered on private credit

Limited track record relative to established players

Launching private credit CLO ETFs aimed at capturing market share in less‑traditional credit segments Pitchbook

Virtus Investment Partners

New entrant with similar CLO ETF initiatives targeting private credit markets

Focused expertise in structured products, portfolio diversification

New market entrant with evolving product credibility

Recently launched a CLO ETF strategy focused on private credit, mirroring industry shifts toward alternative lending Pitchbook

JPMorgan

Major lender and active CLO investor

Extensive market expertise, robust balance sheet, and active role in refinancing and secondary market transactions

Potential exposure to refinancing and reset risks

Actively supporting loan repricing, refinancing, and reset activities to maintain competitiveness in the CLO issuance scene Moody's

Deutsche Bank

Not only a major player in financing but also a key research provider, offering market forecasts and advisory services

Global market insight, research expertise, and influence on market sentiment

Exposure to macro uncertainties and evolving geopolitical conditions

Providing industry forecasts and analysis to guide CLO issuance strategy; focused on transmission of refinancing and reset trends Deutsche Bank

Category

Key Entities/Examples

Market Role

Strategic Focus

Issuers

Major banks, asset managers, specialty finance companies (e.g., entities covered by SIFMA data)

Origination of asset-backed deals

Emphasis on credit resilience, income generation, and meeting supply demands in both U.S. and European markets SIFMA European ABS 2025

Investors

Insurance companies, pension funds, and retail via CLO/ABS ETFs

Capital provision and yield generation

Seeking stable cash flows, income focus, and diversification across risk profiles Structured Products 2025 Outlook

Intermediaries

Rating agencies, data platforms (e.g., Global ABS, SIFMA), advisory firms

Market data, transparency, and facilitation of pricing

Supporting market consolidation and transparency in issuance and trading activities Global ABS

Aspect

Investment Type

Trend/Observation

Impact on Issuance

Data/Figures/Examples

Source

Institutional Funding

Banks & Financial Entities

Sustained securitization, driven by stable balance sheets and easing financing conditions

Consistent ABS and CLO issuance; benefits from refinancing and resets

US investor-placed ABS reached €43B in 2024; European securitization issuance near €135B forecast for 2025

S&P Global Ratings (U.S.), S&P Global Ratings (Europe)

Funding Rounds

Public/Private Funding

Robust reset and refinancing activity, along with new issuance boosted by market recovery

ABS and CLO issuance remain steady; more refinancing due to lower financing costs

CLO new issuance in the U.S. reached record levels in 2024 with US$202B new deal volume; resets nearing US$223B in 2024

Nuveen, Deutsche Bank

Aspect

Investment Type

Trend/Observation

Impact on ABS/CLO Issuance

Data/Figures/Examples

Source

Private Equity & Private Credit

Private Equity/Venture Capital

Increased deployment of dry powder and enhanced appetite for structured assets; M&A activity spurred by private equity dry powder

Supports CLO issuance through widening asset spreads and refinancing activity

Emerging middle-market CLOs, private loan securitisations (PLS) becoming more common; private credit bridging gaps left by big banks

Deutsche Bank, Lexology

Venture Capital

Tech and Platform Investments

Focus on innovation in sectors like digital infrastructure and subscription-based services

While direct VC input in traditional ABS/CLO is limited, VC-backed tech platforms support data centers and digital asset platforms, which may impact underlying asset quality

Digital infrastructure and data center demand accelerating, partly due to AI and increased connectivity

S&P Global Ratings

Security Type

Key Trends and Challenges

Funding and Issuance Impact

Notable Figures / Market Highlights

Source

ABS

Ongoing adaptation to higher interest rates and regulatory reforms; mixed performance across subsectors (e.g., auto, timeshare, consumer ABS)

Issuance levels have moderated from record highs but remain stable due to diversified underlying asset performance

ABS issuance in the U.S. jumped to €43B in 2024; performance varies due to interest rate changes

Lexology, Moody’s

CLO

Tightening spreads due to low financing costs; restructuring through resets and refinancing; growth in both new issuance and secondary market activity

Record issuance in 2024 from both new issues and resets fosters a balanced funding profile, even as refinancing activity boosts overall market liquidity

US CLO issuance: US$202B in new issues, US$223B in resets in 2024; European CLO issuance expanding significantly

Nuveen, Deutsche Bank

Relationship

Explanation

Resulting Market Behavior

Source

Institutional vs. Private Equity

Institutional funding remains steady with banks and financial institutions refinancing at favorable rates, while private equity drives innovation in structuring and sourcing middle market loans

A balanced supply profile in CLOs; wider asset spreads are achievable with low liability costs

Deutsche Bank, S&P Global Ratings

Regulatory and Market Maturity

Regulatory reforms (e.g., Basel III, risk retention rules) alongside easing financing costs have spurred both ABS and CLO activity

Enables more robust underwriting standards; transparent funding rounds and sustained investor demand

Lexology, Moody’s

Funding Rounds and Resets

Active refinancing (resets) enhances asset spreads in CLOs while high-quality ABS collateral continues to attract institutional funds

Leads to record issuance volumes in times of tightening spreads and low loan costs

Nuveen, European Structured Credit Outlook

Corporation / Partnership

Strategic Initiative

New Product / Service Launches

Technological Adaptations

Financial & Quantitative Data

Citation

StructuredWeb

Global expansion through enhanced AI innovation in channel sales and marketing

AI-driven ChannelAI platform automating communication and personalized partner engagement

Extensive use of AI automation for content creation and partner communication; integration with advanced analytics

Secured $30M investment; achieved 50%+ CAGR over three years; serves Fortune 100/500 with channel sales >$100B annually

FinTech Futures

Intain

Digitization of the structured finance value chain through integrated digital solutions

IntainMARKETS platform integrating core banking systems with blockchain and AI capabilities

Investment in AI since 2018; seamless marriage of Web 2.0 & Web 3.0; automation of product development and process steps

Notable progress in providing end-to-end digital solutions; focuses on reducing fragmentation in process automation

Medium

Heyanon.ai & DWF Labs

Simplification of decentralized finance and bridging traditional financial operations with AI-enabled automation

Launch of DeFAI technology offering natural language driven commands and autonomous transaction execution

Use of natural language processing and AI agents to automate multi-step financial operations on blockchain

Enhanced ease-of-use for complex DeFi interactions; designed to reduce user barriers and risk

Business Insider

Key Aspect

Description

Impact on Structured Finance

Citation

Adoption of AI

Corporations are integrating AI to automate data extraction, partner engagement, and decision-making processes

Increases efficiency, reduces manual effort, and enables rapid scaling of financial operations

FinTech Futures

Integration with Blockchain

Blending blockchain with existing finance solutions to secure and validate transactions and data integrity

Enables transparent and compliant digital ecosystems and supports tokenized financial products

Medium

Focus on Partnerships

Strategic partnerships and equity investments enabling faster global expansion and enhanced product development

Drives innovation; opens access to new markets, strengthens operational synergies

Business Insider

Aspect

Summary

Strategic Partnerships

Corporations are forming key alliances and receiving strategic investments to accelerate market penetration and product innovation.

New Product Launches

New AI-powered platforms (e.g., ChannelAI, IntainMARKETS, and DeFAI) are being launched to address market needs in automation and integrated digital finance.

Adaptation to AI & Blockchain

The industry is rapidly incorporating AI and blockchain to streamline processes, ensure data integrity, and provide scalable, end-to-end digital solutions.

Trend

Key Characteristics

Examples/Integrations

Digitized Value Chain

Complete digitization of structured finance processes from origination to servicing; integrated multi-step platforms

IntainMARKETS platform integrating 1–6 processes for seamless capital markets access Medium

AI-Driven Automation

Continuous R&D investments in process automation; optimization of product development cycles

Investments in AI since 2018 to drive both client process automation and self-driven product development Medium

Web 2.0 & Web 3.0 Convergence

Merging traditional digital systems with blockchain-based decentralized features

Seamless integration of existing core banking solutions with new blockchain-enabled platforms

Business Model Shift

Key Impact

Driving Factors

Integrated Digital Platforms

Replacing multiple siloed automation tools with unified, end-to-end solutions for deal execution

Need for cost-efficient integration, reduced system integration expenses, and a holistic customer experience Medium

Platform-Based Ecosystems

Enabling regional banks and credit unions to access structured capital markets seamlessly

Strategic R&D investments fueling innovation in digital platforms and partnerships between core banking providers and fintech solutions

Technology

R&D Investment Focus

Impact on Structured Finance

Artificial Intelligence (AI)

Automating processes, enhancing product development, predictive analytics

Improves efficiency, reduces manual integration across structured finance processes, and enables hyper-personalized services Medium

Blockchain

Secure, transparent ledgers; digital identity and smart contracts; integration of decentralized systems

Provides immutable records, facilitates trust and transparency, and bridges traditional financial systems with decentralized models

Opportunity Area

Key Trends / Drivers

Investor Demand / Benefits

Supporting Citations

Green Securitization

Environmental regulations, decarbonization mandates, improved ESG disclosures, attractive yields & diminishing green premium.

Increased appetite for sustainable investments; integration with fixed income portfolios; lower cost of capital financing.

GS Asset Management Outlook 2025

Digital Asset Securitization

Adoption of blockchain for tokenization, fintech innovations, and AI/ML driven risk management systems.

Broader investor access, improved transparency, and liquidity in traditionally opaque asset classes.

IQ-EQ Trends

Non-Traditional Consumer & Niche ABS

Expansion into new asset classes including auto ABS, student loan ABS, freight ABS, and infrastructure refinancing; evolving credit risk analytics.

Diversification of revenue streams, exposure to underserved markets, potential for higher yields and non-correlated performance.

SFA Research Corner

Additional Emerging Areas

Key Drivers

Investor Focus

Supporting Citations

Renewable Energy & Infrastructure ABS

Growth of renewable projects and sustainable infrastructure investment; regulatory support; post-pandemic capital shifts.

Desire for stable, long-term cash flow projects; diversification; alignment with global decarbonization goals.

CSC Blog

Private Credit & Middle-Market CLOs

Gap filling as traditional bank lending declines; regulatory changes such as Basel 3.1; evolving risk-retention norms.

Attractive risk-adjusted returns; diversification away from conventional bank financing; supportive private market trends.

IQ-EQ Trends

Subcategory

Key Strategies & Elements

Impact on Investor Trends

Example / Notes

Platform-Specific Outreach

Utilization of platforms like LinkedIn, Twitter, Instagram, and industry-specific networks.

Enhances brand recognition and trust, builds a sense of community.

Financial institutions use LinkedIn for thought leadership and Twitter for real-time market updates Mint Position .

Influencer/Micro-Influencer Marketing

Collaboration with micro-influencers to share educational and compliant content about finance products and market trends.

Improves credibility and shapes perception through trusted voices.

Influencer partnerships help address complex financial topics with accessible content Mint Position.

Interactive Engagement

Live video sessions, Q&A rounds, and webinars that break down complex financial index updates and structured product information.

Provides transparency on financial products, which encourages informed investment decisions.

Webinars and live chats can demystify structured finance for potential investors Landingi.

Subcategory

Key Strategies & Elements

Impact on Investor Trends

Example / Notes

PPC and Retargeting

Use of pay-per-click (PPC) campaigns and dynamic retargeting ads with focused keywords to capture interest in structured finance products.

Generates qualified leads while keeping marketing budgets efficient.

PPC campaigns are tailored to reach audiences actively searching for investment opportunities Landingi.

Data-Driven Personalization

Employing AI and machine learning for personalized ad targeting based on investor behavior and historical transaction data.

Increases conversion rates by showing relevant, personalized message to prospective investors.

AI-driven ad targeting refines messaging to match investor preferences Brands at Play.

Mobile Optimization

Ensuring advertisements and landing pages are optimized for mobile devices, recognizing the shift of investor engagement to on-the-go platforms.

Enhances user experience, thereby improving overall campaign effectiveness.

Mobile-optimized design improves navigation and conversion, critical for fast-paced investment decisions Landingi.

Subcategory

Key Strategies & Elements

Impact on Investor Trends

Example / Notes

Omnichannel Integration

Coordinating digital campaigns across multiple channels including email, social media, video, and website content for a unified message.

Builds a consistent brand image and reinforces trust among investors.

A seamless customer experience creates high engagement and retention for long-term investor relationships O8.

Video and Content Marketing

Use of tutorial videos, explainer videos, and interactive infographics to educate investors about structured finance products and market trends.

Boosts transparency and investor education, leading to improved decision making.

Videos simplify the complexities of structured finance, enhancing investor comprehension SundaySky.

AI-Powered Campaigns

Incorporation of AI tools for predictive analytics, lead scoring, and real-time campaign adjustments.

Optimizes campaign performance and quickly adapts strategies based on investor behavior.

AI-driven personalization helps allocate recommendations and cross-sell opportunities Brands at Play.

Digital Component

Core Benefit

Investor-Centric Impact

Strategic Note

Social Media

Enhanced credibility and community building

Drives transparency and shapes investor trust

Utilizing influencers and interactive sessions addresses complex finance concerns.

Online Advertising

Precise targeting and cost-effective lead generation

Improves conversion by delivering personalized content

Embracing AI for personalized targeting plays a pivotal role in attracting quality investor leads.

Digital Campaigns (Omnichannel)

Consistent messaging across channels

Builds long-term investor engagement and loyalty

Integrated campaigns strengthen brand image and educate investors continuously.

Technology Component

Impact on Customer Behavior

Mechanism/Effect

Reference

Mobile Platforms

Increased accessibility and real-time information access

Users can check portfolio updates, track performance, and engage with digital investment tools instantly on-the-go.

Nordstone

AI Assistants

Personalized investment recommendations and decision-support

AI-powered virtual assistants analyze customer data to provide tailored investment advice and streamline underwriting processes.

Acropolium, LinkedIn

Integrated Digital Platforms

Enhanced process efficiency and seamless customer experience

Integration of fragmented digital solutions into a comprehensive platform reduces friction in performing multiple transaction steps.

Medium

Key Aspect

Impact/Outcome

Process Enhancement

Reference

Real-Time Data Access

Greater transparency and faster response times

Mobile apps provide up-to-date deal structures, pricing, and market data to both institutional and retail investors.

Nordstone

Personalized Interaction

Increased customer engagement and satisfaction

AI assistants cater to individual risk profiles and investment histories, tailoring structured finance recommendations.

LinkedIn

Process Automation & Integration

Reduced complexity and increased efficiency

Automating complex documentation and underwriting schedules via AI reduces manual errors and accelerates service delivery.

ScienceSoft, Medium

Component

Functionality

Benefit to Investment Decisions

Reference

Mobile Analytics Tools

Offer easy-to-navigate dashboards

Enable investors to monitor market trends and portfolio performance in real time, contributing to timely decision-making.

Nordstone

AI-Powered Investment Assistants

Analyze unstructured and structured data

Provide insights on risk exposures, forecast market movements, and generate personalized investment recommendations.

Acropolium, LinkedIn

Initiative/Trend

Description

Structural Innovation/Mechanism

Numerical/Financial Data

Source

Green Residential Mortgage-Backed Securities (RMBS)

Securitisation of low-carbon building loans via government-sponsored enterprises.

Mortgage pools targeting energy-efficient buildings; uncoupling rating from originators using diversification.

Fannie Mae’s green RMBS issuance of $47 billion.

ICLG

Property Assessed Clean Energy (PACE) Securitisations

Loans for financing energy efficiency/renewable improvements on properties repaid via property tax models.

Aggregates smaller green loans into investment grade assets.

PACE securitisations used in U.S. and replication in Spain (EuroPACE).

ICLG

Solar Asset-Backed Securities (ABS)

Securitisation of leases/loans funding solar energy projects.

Bundling smaller solar assets into standardized debt instruments.

First solar ABS in Germany launched by Enpal with €356 million commitment financing over 12,500 systems.

ICLG

Aggregation of Green Lending Portfolios

Broader portfolio construction enabling exposure to retail green finance including home renovation and EV loans.

Enables risk diversification and liquidity improvements for smaller, environmentally focused assets.

Potential growth to over €300 billion in securitisation at European household level.

Delano.lu

Product/Innovation

Description

Sustainability & Transparency Features

Market/Regulatory Insights

Source

Green Bonds

Debt instruments with proceeds strictly for environmentally beneficial projects (renewables, clean infrastructure).

Clear use-of-proceeds reporting; alignment with TCFD recommendations to reduce greenwashing risks.

Exponential market growth with diversified offerings, e.g., Canadian green bond programs with regional focus.

Arbor.eco

Green Loans

Loans offered with preferential conditions specifically for funding eco-friendly projects.

Purpose allocation to green projects; lower interest rates; third-party certification and reporting.

Increasing adoption across multiple sectors; supportive regulatory and fiscal incentives globally.

Arbor.eco

Sustainability-Linked Bonds and Securitisation Models

Hybrid instruments linking financial conditions to achievement of environmental benchmarks.

Integration of ESG metrics into loan/bond structures; enhanced disclosure standards to mitigate greenwashing.

Efforts to standardize ESG criteria; increasing investor demand amid evolving regulatory standards (SFDR, EU Taxonomy).

Delano.lu

Regulatory and Standardisation Innovations

New regulations and reporting frameworks (e.g., SFDR, ISSB, CSRD) that enforce transparency in eco-friendly projects.

Requires disclosure of environmental, social, and governance factors; improved comparability of projects and risks.

Expected to drive capital to low-emission projects; influences pricing and access for companies with high ESG scores.

AcuityKP

Aspect

Relationship to Green Securitisation in Structured Finance

Aggregation of Small Projects

Structured finance allows aggregating numerous small green loans or projects into investment-grade instruments, boosting liquidity and investor accessibility.

Risk Diversification

Securitisation instruments permit dispersal of credit risk among various assets, making funding of innovative eco-friendly initiatives more viable.

Standardisation and Transparency

New eco-friendly product developments are supported by evolving ESG standards and regulatory frameworks that are integral to structured green financing.

Aspect

Key Initiative/Practice

Impact on Investors

Citation

Ethical Business Practices

Adherence to stringent ethical standards such as compliance with CSRD and integrated sustainability reporting

Enhances confidence by ensuring accurate risk assessments and fosters long‐term value creation

Microsoft Sustainability

Transparency

Standardized ESG data disclosure and holistic reporting processes incorporating environmental, social, and governance metrics

Enables investors to compare structured finance instruments while reducing risks of greenwashing

S&P Global CSRD Reporting

CSR Initiatives

Integrated CSR programs such as community engagement, environmental stewardship, and financial literacy initiatives

Builds stakeholder trust and positively influences market perceptions, ultimately guiding investment decisions

Bank Mandiri CSR; BNI AM CSR Activities

Factor

Description

Numerical/ Regulatory Data

Citation

Improved Data Quality

Implementation of CSRD and similar regulations ensures disclosure of detailed ESG data and double materiality assessments

CSRD expected to impact over 50,000 organizations; detailed reporting guidelines with 82 disclosure requirements

CSRD: Be Data Ready

Standardization & Comparability

Uniform reporting standards help in assessing the risk profile of structured finance assets, leading to more informed decision-making

Harmonized standards across sectors facilitate direct comparison and risk mitigation strategies

Aligned Incentives Sustainability Trends

Resilience & Long-Term Value

CSR strategies and ethical practices enable companies to mitigate sustainability risks making them attractive in structured finance portfolios

Transparency mitigates reputational risks and leverages sustainability as a competitive advantage

S&P Global Sustainability Yearbook 2025

Framework

Key Components & Methodology

Application in Structured Finance

Data & Considerations

SWOT

• Strengths & Weaknesses (Internal) • Opportunities & Threats (External)

• Assess internal capabilities of financial institutions or securitization vehicles • Identify competitive advantages or vulnerabilities in portfolio structuring and risk management

• Operational metrics, balance sheets, credit ratings, regulatory compliance data Investopedia

PESTEL

• Political • Economic • Sociocultural • Technological • Environmental • Legal

• Evaluate macro factors affecting structured finance markets • Understand regulatory changes, economic cycles, and technology risks that influence securitization trends

• Government policies • Economic forecasts • Demographic trends • Technological shifts and legal/regulatory news CIPD

TAM/SAM/SOM

• Total Addressable Market (TAM): Total revenue opportunity • Serviceable Available Market (SAM): Targetable segment • Serviceable Obtainable Market (SOM): Realistic captured share

• Market sizing for originations, asset-backed securities, or collateralized debt obligations • Determine future market potential and investor appeal in structured markets

• Asset performance data, customer segmentation, market reports and industry research Rho

KPI

Definition

Measurement & Calculation

Relevance

Issuance Volume

Total amount of structured finance securities (e.g. ABS, CLOs, RMBS) issued in a given period.

Sum of new securitizations (e.g. reported in USD or EUR, e.g., $839 billion forecast S&P Global Ratings)

Assesses market activity, investor appetite, and market depth. Increases in issuance can indicate positive market momentum.

Default Rates

Percentage of defaults within the structured finance portfolio.

(Number of defaults / Total outstanding issues) x 100. For example, default rate forecasts of 3.5% S&P Global Ratings

Reflects the credit performance of underlying assets and the effectiveness of underwriting standards.

Liquidity Trends

Measures the ease of trading structured finance securities (bid-ask spreads and trading volumes).

Analysis through bid-ask spread trends and market turnover data (e.g., tighter spreads indicate enhanced liquidity; see Moody’s insights Moody's)

Provides insight into market efficiency and the ability to enter or exit positions without significant price impact.

Rating Stability

Percentage change in credit ratings of securities over a period.

Ratio of affirmations to total rating actions over a monitoring period (e.g., 97.9% stability as observed by KBRA KBRA Research)

High stability suggests consistency in credit quality and underpins investor confidence in structured assets.

Delinquency/Default Migration Rates

The change in the proportion of assets experiencing delayed payments or default.

Comparison of current delinquency figures with historical data; may use a trailing 12-month rate.

Signals stress within underlying asset pools and helps forecast future default trends.

KPI

Definition

Measurement (Example Data Points)

Relevance

Collateral Performance

Underlying asset quality measured via asset utilization, lease rates, or residual values.

Stable asset utilization across sub-sectors; improvements indicated by upgrade counts (e.g. 25 upgrades reported in some sub-sectors S&P Global Ratings)

Indicates the strength of collateral, which supports securitization performance in the structured finance portfolio.

Liquidity of Issuance Market

Assesses market absorption capacity in relation to the new issuance volume.

Issuance forecasts (e.g., $345 billion forecast) vs. market capacity

Helps understand if large volumes could compress spreads or impact pricing dynamics.

Refinancing and ARD Risk

Evaluates the risk associated with upcoming mandatory amortization or refinancing events.

Number of securities with upcoming ARDs and observed refinancing conditions (e.g., tougher refinancing if interest rates persist)

Provides insight into future market pressures and potential stress points among structured finance issues.

Source Name

Type

Focus/Details

URL

S&P Global Structured Finance Outlook

Industry Report

Comprehensive outlook on ABS, CLOs, and other structured finance sectors for US and Canada including credit trends and transaction structures S&P Global Ratings.

Link

Moody's Global Structured Finance Outlook

Industry Report

Analysis of structured finance trends, including ABS and CLO assets, impacted by macroeconomic factors and refinancing activity Moody's.

Link

Fitch Ratings – NA Structured Finance Outlooks

Industry Report

Assesses borrower pressures and trends in the structured finance space with particular insights into ABS performance Fitch Ratings.

Link

KBRA ABS Sector Outlook

Industry Report

Focuses on ABS issuance, credit fundamentals and market supply dynamics in the ABS sector KBRA.

Link

Market Research Future – Structured Finance Market Size, Share & Trend 2032

Industry Report

Provides market sizing, trends, and growth forecasts for various structured finance products including ABS and CLOs Market Research Future.

Link

Source Name

Agency/Type

Focus/Details

URL

FDIC – Enhancing Transparency in the Structured Finance Market

Government/Regulatory

Provides data on disclosures, transparency, and risk management in structured finance transactions relevant to ABS and underlying assets FDIC.

Link

SIFMA – US Asset Backed Securities Statistics

Industry Association (with regulatory oversight)

Offers comprehensive statistics on ABS issuance, trading, and outstanding data, serving as a quasi-official source for market performance metrics SIFMA.

Link

Source Name

Survey/Research Type

Focus/Details

URL

Global ABS Conference

Market Survey/Networking

Brings together market participants for qualitative surveys, peer insights, and trend discussions surrounding ABS, complementing quantitative metrics Global ABS.

Link

SIFMA Interactive Data Visualization (Fixed Income & ABS Data)

Aggregated Data/Survey

Utilizes interactive tools to offer daily, monthly and annual statistics and trend analysis on ABS and other fixed income products, supporting market surveys and sentiment analysis SIFMA.

Link

Market Research Future Reports

Aggregated Data/Survey

Combines primary and secondary research data to report on market trends and investor sentiment in structured finance, including surveyed insights on ABS and CLOs Market Research Future.

Link

Recommendation

Action Items

Key Considerations

Source Citations

Diversify Exposure with Tech-Enabled Assets

Allocate funds toward structured finance products leveraging integrated digital platforms and AI; monitor emerging product grids

Leverage evolving digital platforms and automation trends; mitigate risks from narrow digital tool providers 1

Morgan Stanley1, J.P. Morgan2

Assess Cyber Risk and Systemic Vulnerabilities

Review portfolio exposure in assets subject to cybersecurity risks; partner with experts in fintech risk analysis

Cyberattacks and regulatory shifts may impact returns; risk management is essential 3

S&P Global3

Monitor Global and Geopolitical Shifts

Keep pace with policy changes and geopolitical risks influencing structured finance; use scenario stress tests and sensitivity analysis

Dynamic geopolitical landscape may influence market liquidity and cross-border activities 1

Morgan Stanley1

Recommendation

Action Items

Key Considerations

Source Citations

Embrace Integrated Digital Platforms

Invest in platforms that combine Web 2.0 and Web 3.0 elements; unify process steps using solutions like IntainMARKETS

Enhancing end-to-end process automation can improve operational efficiency and market access 2

Medium2

Strengthen Cybersecurity and Risk Management

Upgrade cybersecurity frameworks, conduct regular cyber stress testing, and vulnerability assessments

Mitigates potential losses from increased cyberattack risks and regulatory scrutiny 3

S&P Global3

Ramp Up Digital Transformation Investments

Scale investments in AI, blockchain, and automation to enhance proprietary processes and customer interfaces

Consolidation of digital systems reduces integration costs and improves scalability 2

Medium2

Recommendation

Action Items

Key Considerations

Source Citations

Update Regulatory Frameworks

Adapt regulations to support innovation in digital and structured finance; implement technology-neutral standards

Must balance innovation support with robust risk oversight and safeguard systemic stability 4

MayerBrown4

Enhance Cyber Resilience Policies

Mandate cyber stress tests and enhance vulnerability assessments in financial institutions; promote information sharing

Increased digitalization makes cybersecurity a core component of financial stability 3

S&P Global3

Foster Collaboration with FinTechs

Create platforms for regular dialogue between regulators, banks, and fintech companies to discuss innovations and risks

Collaboration can help align market practices with evolving technology trends 1

Morgan Stanley1

Data Point

Indicator

Relevance

Cybersecurity Investment Growth

+X% annual growth forecast

Reflects increased spending to mitigate technology risk 3

Digital Transformation Spend

$Y billion over next 5 years

Indicates industry scale investments; cost-saving opportunity 2

Regulatory Adaptation Timelines

Updated policies within 1–2 years

Essential for mitigating systemic risks 4

Factor

Impact & Drivers

Forecast Implications

Source(s)

Technological Advancements

Enhanced data analytics, digital platforms for underwriting, and automation in risk management improve deal structuring and monitoring.

Continued incorporation of digital tools is expected to increase underwriting accuracy, lower issuance costs, and support niche ABS segments (e.g., data center and consumer loan securitizations).

S&P Global, Moody's

Economic Drivers

Economic recovery factors, interest rate normalization, and shifts in consumer credit performance influence collateral quality.

Issuance volumes may grow moderately as lower base rates and steady consumer credit recovery support ABS performance.

Moody's, Janus Henderson

Regulatory Changes

Shifts in fiscal policy, evolving safe-harbor frameworks, and specific resolutions (e.g., adjustments in homeowner finance and consumer protection policies)

Regulators may provide frameworks that both lower risk and spur innovation, fostering a balanced issuance environment.

Market Research Future

Factor

Impact & Drivers

Forecast Implications

Source(s)

Technological Advancements

Improvements in risk analytics and use of digital platforms streamline CLO structuring and secondary market operations.

Predicts increased issuance efficiency and enhanced pricing transparency, which could attract a broader investor base including retail participants.

Nuveen

Economic Drivers

Declining interest rate trends, refinancing opportunities, and improved corporate balance sheets post-rate hikes bolster CLO performance.

Sustained robust demand coupled with near-record issuance volumes; reset and refinancing activity are forecast to continue to drive growth.

Nuveen, Deutsche Bank

Regulatory Changes

Policy shifts and potential fiscal adjustments (including aspects of trade and tax policies) create a dynamic backdrop that may influence loan pools and origination practices.

May prompt CLO managers to adjust capital structures and risk pricing strategies; steady regulatory evolution is expected to support transparency and resiliency in the market.

Deutsche Bank

Indicator

2023 Value (USD)

Forecast/Notes

Source(s)

Total Structured Finance Market Value

~980.21 billion

Projected to grow at a 4.7% CAGR from 2024 to 2032; North America remains the largest market share segment.

Market Research Future

ABS & CLO Issuance Volumes

Not separately detailed

Both ABS and CLO issuance expected to remain robust with periodic resets/refinancings; CLO volumes likely near record levels in 2025.

Nuveen, S&P Global

Category

Key Trend

Implication

Source(s)

ABS Issuance

Digital transformation & improved analytics

Enhanced risk assessment and lower costs push new product innovation.

S&P Global

CLO Issuance

Refinancing momentum & tight liability spreads

Record or near-record issuance driven by low financing costs and attractive yields.

Nuveen, Deutsche Bank

Market Dynamics

Regulatory easing paired with targeted oversight

Provides a stable foundation for both ABS and CLO markets, balancing risk and innovation.

Market Research Future

Scenario

Interest Rate Environment

Key Impact Factors

Expected Market Response

Base Case

Stable to gradual rate declines (~4.4%–3.4% over horizon as indicated in stress test projections Federal Reserve, 2025)

Moderate refinancing challenges; stable asset value; continued issuance for corporate and consumer ABS.

Issuance volume remains steady with structured transaction strengths (e.g., stable data center ratings, secure utility securitizations) S&P Global Ratings.

Pessimistic

Higher persistent rates; limited decline due to elevated refinancing risks and tougher ARD conditions

Sharper downside risk: increased refinancing conditions causing weak performance in retail and triple-net portfolios; higher capital costs.

Issuance volume is subdued; rating downgrades more likely in sectors sensitive to refinancing risks such as container leasing and retail portfolios.

Optimistic

Faster normalization with lower short-term rates due to more accommodative policy responses

Lower refinancing rates improve transaction margins; increased investor appetite for floating rate assets.

Expansion in CLO issuance and growth in public infrastructure financing (data centers, fiber, cell towers) support higher issuance volumes.

Scenario

Inflation Outlook

Key Impact Factors

Expected Impact on Structured Finance Transactions

Base Case

Inflation near target (~2.1%-2.8% as projected Fannie Mae, 2025)

Moderately pressured consumer balance sheets; balanced counterparty risk; modest spreads.

Credit performance remains stable; unaffected rating trends for most transaction types, with steady demand for ABS.

Pessimistic

Sustained higher inflation (>3%)

Eroded consumer savings; higher operating costs for sponsors; inflation uncertainty affecting asset valuations.

Increased delinquencies, particularly in segments like timeshare and retail portfolios; wider cap rates and potential rating downgrades.

Optimistic

Faster convergence toward 2%

Lower inflation risk enables more favorable refinancing conditions; improved household balance sheets.

Support for stable performance across assets, with potential for capital inflows in segments like utility securitizations and consumer ABS.

Scenario

Regulatory Environment

Key Considerations

Expected Market Impact

Base Case

Continuation of existing frameworks with gradual updates KPMG Regulatory Insights

Current risk retention practices; stable supervisory stress test scenarios; gradual easing in some agency guidelines.

Moderately stable transaction structuring; ratings remain stable with minor adjustments in risk weights, supporting regular issuance and refinancing flows.

Pessimistic

Accelerated tightening or disruptive changes

Increased capital charges; more stringent risk retention requirements; higher risk weights on securitizations.

Higher refinancing challenges and constraints on new transactions; potential downgrades in asset ratings and reduced volume.

Optimistic

Harmonized and predictable regulatory updates

Clarity on risk retention; beneficial adjustments in regulatory capital calculations; consistent enforcement approach.

Enables improved structuring flexibility; potentially lower capital requirements and an increase in both issuance and transaction activity.

Asset Class

Base Scenario

Pessimistic Scenario

Optimistic Scenario

Transportation - Aircraft

Stable issuance; modest growth

Softening in issuance; tougher refinancing

Continued strength with tighter spreads

Transportation - Container

Stable to moderate performance

Headwinds due to higher tariffs and inflation

Improved pricing if rates normalize

Triple-Net Lease Portfolios

Stable-to-positive ratings

Increased tenant defaults, widening cap rates

Strong performance in high-quality, long-term leases

Utility-Related Securitizations

Poised for growth driven by infrastructure needs

Vulnerable to cost pressures and tighter refinancing

Accelerated growth with relaxed rate conditions

Data Centers

Stable ratings with robust demand

Potential downward pressure due to tightening market conditions

Accelerated growth driven by high computing needs and AI deployments

Variable

Base Value/Trend

Pessimistic Impact

Optimistic Impact

Interest Rate Levels

Gradual decline from ~4.4% to ~3.4% [Fed, 2025]

Higher rates, tougher refinancing conditions

Faster normalization with lower borrowing costs

Inflation Rate

Between 2.1% and 2.8% [Fannie Mae, 2025]

Sustained inflation >3%, eroded consumer finances

Convergence toward 2%, stabilized pricing

Regulatory Stringency

Gradual, predictable updates

Accelerated tightening; increased capital charges

Harmonized updates reducing uncertainty