Product Category

Description

Examples & Key Attributes

ABS

Securitized debt instruments with cash flows derived from consumer and commercial receivables.

Auto loans, credit cards, leases, student loans; features include tranching, overcollateralization, and bankruptcy remoteness (Guggenheim Investments)

CLOs

Securities structured from diversified pools of corporate loans with actively managed portfolios.

Multi-tranche structures with senior, mezzanine, and equity segments; active management to replace maturing/downgraded loans (AccountingInsights)

Investor Type

Description

Representative Investors

Institutional

Large entities with high capital allocations demanding stable, yield-optimized portfolios.

Banks, pension funds, insurance companies, asset managers, hedge funds (S&P Global)

Retail & Private

Investors seeking exposure through packaged or ETF offerings, typically with lower ticket sizes.

High-net-worth individuals via dedicated retail-focused ABS and packaged CLO products (State Street)

Risk Category

Key Characteristics

Representative Asset Types

Investment Grade

Securities with high quality and robust credit enhancements.

Prime RMBS, high-grade consumer ABS, senior CLO tranches (Moody’s)

Non-Investment Grade/High Yield

Offer higher yield potentials but with increased volatility and credit risk.

Mezzanine or subordinated tranches in ABS/CLOs (S&P Global)

Metric

Value

Notes/Source

Latest New Issue Volume (FY2024)

~$325 billion

KBRA Report

Projected New Issue Volume (FY2025)

~$345 billion (~6% increase)

KBRA Report

Outstanding Balance

~$411.5 billion

Data as of Oct 31, 2024 (KBRA)

Metric

Value

Notes/Source

Latest New Issue Volume (2024, US Market)

~$202 billion in new issuance

Deutsche Bank

Additional Volume Metrics

~$223 billion in resets; ~$38 billion in MM/private credit deals

Deutsche Bank

CLO ETFs AUM Growth

From ~$2.25 billion (2023) to over ~$20 billion

Deutsche Bank

Segment

Estimated SAM ($ Billion)

Consumer ABS

~221

Commercial ABS

~119

Total ABS Market

~340

Metric

Estimated Value ($ Billion)

Annual CLO Issuance

~60

Period

ABS Issuance Trend

CLO Issuance Trend

2018-2019

Baseline levels; steady flow

Moderate issuance; largely traditional structures

2020 (Pandemic)

Volatility with lower issuance in some ABS segments

CLOs maintained momentum with near-zero defaults

2021

Recovery phase with stable volumes

Improved performance; buoyant issuance due to low defaults

2022

Mixed performance; auto ABS up to +18% YoY in certain segments

Increased activity with resets and refinancing noted

2023-2024

Renewed investor interest; overall issuance up by 58% YoY in Q2 2024

Continued strong performance; marked volume increases in private credit CLOs

Category

Default Rate Characteristics

Liquidity Trends

ABS

Generally very low (<1% for investment-grade); non-investment segments slightly higher

High liquidity with active reporting; some esoteric ABS face valuation uncertainty

CLOs

Exceptionally low defaults with minimal incidents in recent years

Robust liquidity driven by strong investor appetite; resilient even in stress periods

Year

Estimated ABS Issuance ($ Billion)

Annual Growth Rate (%)

2024

325

Baseline

2025

345

~6%

2026

366.7

~6%

2027

388.7

~6%

2028

412.2

~6%

2029

436.9

~6%

2030

463.0

~6%

Year

Estimated CLO New Issuance ($ Billion)

Annual Growth Rate (%)

2024

202

Baseline

2025

212

~5%

2026

223

~5%

2027

234

~5%

2028

246

~5%

2029

259

~5%

2030

272

~5%

Metric

Details

Average Yields

Varies by asset type; higher yields typically on esoteric or subprime asset-backed products (SIFMA).

Pricing Tiers

Structured into tranches based on cash flow priority, collateral quality, and prepayment risks.

Risk Premiums

Higher on vehicles with volatile underlying assets; mitigated by structural protections like overcollateralization.

Metric

Details

Average Yields

Typically higher than comparably rated corporate bonds due to floating-rate features and embedded adjustments (Pinebridge).

Pricing Tiers

Segmented from senior, with investment-grade ratings, to junior tranches with enhanced risk premiums.

Risk Premiums

Increase with lower ratings; active management can narrow spreads over time by de-risking portfolios.

Regulation/Requirement

Key Requirements & Impact

Source

Basel III Endgame

Increased capital requirements and enhanced risk reporting for banks; affects securitisation structures including ABS and CLOs.

Lexology

SEC Rule 192 – Conflicts of Interest

Mandates strict disclosure and governance to avoid conflicted transactions in securitisations.

Lexology

FinCEN Corporate Transparency Act

Requires filing of beneficial ownership details for newly formed entities, impacting SPVs in ABS/CLO transactions.

Lexology

Risk Retention Requirements

Originators must retain at least 5% of the underlying asset exposure to safeguard investor interests.

Dechert Structured Finance & Securitisation 2025

Technology

Description

Impact/Benefits

Associated Risks

Source

AI-Driven Risk Modeling

Utilizes machine learning to improve credit risk analytics and automate underwriting processes.

Enhances risk assessment, pricing accuracy, and operational efficiency.

Relies on quality data and complex implementation.

Intain Article

Blockchain in Securitization

Applies distributed ledger technology to record transactions and manage digital clearing and settlement.

Improves transparency, reduces transaction costs, and supports secure, immutable records.

Regulatory uncertainties and technology maturity challenges may arise.

Deloitte US

Category

Key Factors

Strengths

- High institutional demand from banks, pension funds, and asset managers.- Advanced risk analytics supporting stable pricing and ratings (S&P Global).

Weaknesses

- Sensitivity to credit volatility and interest rate shifts which impact refinancing and cash flows (Janus Henderson).

Opportunities

- Growth in green securitization and non-traditional asset inclusion.- Digital transformation and AI integration improving efficiency and transparency (IQEQ).

Threats

- Economic downturns, regulatory changes, and geopolitical tensions could hinder market growth and elevate risk exposures (Moody’s).

Aspect

Details

Focus

Analysis strictly based on the United States.

Data Coverage

Economic, market, and financial indicators relevant to the U.S. market.

Political Boundaries

Data confined to U.S. federal and state jurisdictions.

Excluded Regions

No consideration for territories or data outside the 50 states and the District of Columbia.

Sources and Citations

Data may be cross-referenced with sources such as Wikipedia: United States.

Category

Description

Economic Indicators

GDP, labor market stats, Federal Reserve data only from the U.S.

Market Analysis

U.S.-specific consumer trends, retail, and financial market evaluations.

Regulatory Impact

U.S. federal and state level regulations affecting market operations.

Financial Data

U.S. financial statistics such as stock market indices and interest rates.

Feature

ABS (Asset-Backed Securities)

CLOs (Collateralized Loan Obligations)

Underlying Asset Types

Diverse pools including auto loans, credit card receivables, student loans, leases, and other consumer or commercial receivables Investopedia.

Primarily comprised of leveraged corporate loans; portfolio generally consists of bank loans and includes some corporate bonds AccountingInsights.

Pool Composition & Dynamics

Generally structured as static pools; in some cases (e.g., revolving credit facilities) there may be a defined reinvestment period but the core composition stays fixed Guggenheim Investments.

Actively managed with a reinvestment period (typically 4-5 years) that permits replacing maturing or downgraded loans; portfolio composition is dynamic and adjusts to evolving market conditions AccountingInsights.

Management Style

Typically passive management; emphasis on serving predictable cash flows derived from the underlying assets, with optional active reinvestment in some structures Investopedia.

Actively managed by collateral managers who buy, sell, and replace loans to optimize portfolio performance and mitigate credit risk; management flexibility is a core value proposition AccountingInsights.

Credit Enhancement Mechanisms

Use multiple investor protection features such as bankruptcy remoteness, overcollateralization, excess spread, cash reserve funds, and structural subordination via tranching to prioritize cash flows TwentyFour.

Rely on structural subordination and greater par subordination (e.g., AAA tranches with 35%+ subordination) along with interest coverage tests and overcollateralization; credit enhancements are calibrated to the higher credit risk of leveraged loans S&P Global.

Cash Flow Distribution

Payment structures are typically sequential or pro-rata; cash flows are allocated through layers (tranches) with senior tranches receiving payments first, providing a cushion for subordinated tranches Guggenheim Investments.

Utilizes a waterfall mechanism similar to ABS but with active management intervention; sequential payments are prioritized to ensure senior noteholders receive payments ahead of junior tranches, thereby reducing risk exposure AccountingInsights.

Ratings and Risk Assessment

Senior ABS tranches often receive investment grade ratings based on the contractual cash flows from diverse underlying assets; ratings might not fully account for active management potential Guggenheim Investments.

CLO ratings depend on the quality of the underlying leveraged loans, with methodologies employing metrics such as the Weighted Average Rating Factor (WARF); performance is sensitive to corporate credit cycles and economic fluctuations AccountingInsights.

Investor Protection

Isolation from the sponsor through bankruptcy remoteness; structure ensures that payments come directly from the asset pool, reducing exposure to the originator’s credit risks Investopedia.

Similar layer of protection through legal isolation within an SPV and higher subordination levels to absorb initial losses; however, performance is more sensitive to economic conditions affecting corporate borrowers S&P Global.

Aspect

Structured Finance (ABS & CLOs)

Traditional Corporate/Municipal Debt

Collateral & Underlying Assets

Funded by a specific pool of assets (e.g., loans, leases) providing asset-level risk protection and diversification Investopedia.

Rely on the entire entity’s creditworthiness; subject to higher refinancing and issuer-specific risks.

Risk Management

Utilization of credit enhancements (overcollateralization, excess spread, subordination) and legal protections (bankruptcy remoteness) that isolate asset performance from sponsor risk.

Investors are exposed primarily to the issuer’s credit risk and market conditions without the additional safeguard of asset isolation.

Flexibility and Management

Structured finance products offer varying degrees of active (CLOs) or passive management (ABS), along with tranche customization to meet a range of risk appetites and yield goals.

Fixed debt instruments typically have a homogeneous structure with less customization regarding risk tranching and management intervention.

Differentiator

ABS Specifics

CLO Specifics

Asset Nature

Wide range of consumer and commercial receivables; often static pools

Primarily leveraged corporate loans; actively managed portfolio with dynamic asset replacement during a reinvestment period

Management Approach

Generally passive; some structures allow limited reinvestment

Actively managed by collateral managers for portfolio optimization

Credit Enhancement & Risk

Multiple built-in protections via structural subordination and excess spread funds

Higher subordination requirements and dynamic credit risk adjustments leveraging rigorous loan portfolio management

Cash Flow & Payment Order

Predictable sequential/pro-rata cash flow allocations

Sequential waterfall with active reinvestment and reallocation during performance shifts

Component

Description

Definition

Structured finance involves pooling financial assets (loans, leases, receivables) and issuing securities backed by contractual cash flows.

Primary Purpose

Provide funding to originators and borrowers while transferring risks to investors.

Key Participants

Originators, servicers (also known as collateral managers), rating agencies, trustees, and investors.

Industry Role

Offers tailored financing solutions with features such as overcollateralization, tranching, and bankruptcy remoteness (Guggenheim Investments).

Aspect

Details

Underlying Assets

Auto loans, credit card receivables, aircraft leases, business loans, and residential/commercial mortgages.

Key Features

Contractual cash flows; tranching of risk; overcollateralization; bankruptcy remote; diversity of payers; static vs. actively managed pools.

Benefits

Matches financing term with asset tenor; reduced refinancing and mark-to-market risks; lower borrowing costs for the sponsor; enhances enterprise valuation (Guggenheim Investments).

Risks

Interest rate sensitivity, prepayment risk, extension risk, liquidity, credit, and valuation risks (J. P. Morgan analysis).

Aspect

Details

Underlying Assets

Collateralized pools of corporate loans, typically leveraged loans.

Key Features

Diversified pool of loans; multi-tranche structure dividing senior and subordinate (equity) interests; record issuance years; structured to absorb credit losses.

Benefits

Low default rates compared to other high-yield instruments; provides periodic payments that are part interest and part principal repayment; mitigates refinancing risks.

Risks

Sensitivity to interest rate changes; extension and prepayment risk inherent in the underlying loans; market liquidity and valuation concerns (Guggenheim Investments).

Process Component

Description

Asset Pooling

Pools of homogeneous assets are aggregated to create a diversified mortgage, loan, or receivables portfolio.

Special Purpose Vehicle

A legal entity (SPV) is created to purchase the asset pool and isolate the assets from the originator, ensuring bankruptcy remoteness.

Structuring

Transaction structures include risk tranching, overcollateralization, and the establishment of contractual cash flows.

Professional Servicing

Ongoing management and reporting of asset performance by dedicated servicers to maximize cash flow certainty; includes credit analysis, renegotiation, and asset disposal if necessary.

Investor Reporting

Regular dissemination of performance reports to facilitate risk management and liquidity assessment (Guggenheim Investments).

Element

ABS & CLOs Comparison

Funding Benefit

Both instruments provide term financing that aligns with the tenor of the underlying assets.

Risk Isolation

Both are structured to isolate risks from the operational balance sheet of the originator.

Investment Grade Ratings

Securitizations often secure investment grade ratings across multiple tranches, though the lower tranches may carry higher risk.

Interest Rate Impact

Both ABS and CLOs are sensitive to interest rate movements, affecting pricing and investor returns; prepayment and extension risks particularly apply to ABS.

Collateral Management

Services include active credit evaluation and asset management, which are key to maintaining stable cash flows (J. P. Morgan, S&P Global).

Product/Service Category

Specific Products/Services Included

ABS Products

Securitized debt instruments backed by auto loans, mortgages, aircraft leases, credit card receivables, and business loans.

CLO Products

Debt securities backed by diversified pools of corporate loans; structured in multiple tranches based on risk and return profiles.

Structuring Services

SPV formation, risk tranching, overcollateralization, and payment prioritization.

Servicing & Reporting

Professional asset management and regular performance reporting to investors to ensure transparency and effective risk management.

Rating & Compliance

Engagement with rating agencies to achieve investment grade ratings and periodic compliance reporting to support market liquidity and investor confidence (Chambers Practice Guides).

Investor Type

Category

Typical Institutions/Investors

Examples and Characteristics

Institutional

Primary

Banks, pension funds, insurance companies, asset managers, hedge funds

Typically allocate large amounts in structured offerings such as CLOs, ABS, and RMBS, and prioritize stable long‐term yields (S&P Global).

Retail and Private

Secondary

Retail investors, high-net-worth individuals, smaller funds

Often access structured products via securitized offerings that target smaller ticket sizes; investment choices include retail-focused ABS and packaged offerings (State Street).

Risk Category

Key Attributes

Representative Asset Types (Examples)

Additional Data/Behavior Indicators

Low Risk

High quality, over-collateralized, strong credit ratings

Prime RMBS, high-grade utility securitizations, and long-term lease backed triple-net assets (Moody’s)

Stable performance, lower default rates, predictable cash flows

Moderate Risk

Adequate collateral, moderate credit ratings

CLOs, consumer ABS with moderate household financial strength, transportation (aircraft – strong underlying lease rates) (S&P Global)

Some sensitivity to interest-rate changes and economic cycles

High Risk

Underlying asset volatility, higher rates of delinquency/default, less overcollateralization

Secondary consumer loans, timeshare securitizations affected by household financial distress, and certain segments within commercial mortgage-backed securities (CMBS)

Higher behavior variability; tracked via default/delinquency trends and liquidity fluctuations (Moody’s).

Asset Class

Primary Attributes

Examples/Transaction Types

Financial Data Considerations

Consumer ABS

Financing based on consumer credit, household loans

Auto loans, credit card receivables, consumer installment loans

Performance tied to household financial strength and delinquencies (S&P Global).

Residential Mortgage-Backed Securities (RMBS)

Secured by residential property mortgages

Prime RMBS with high credit quality, sub-prime segments as secondary

Sensitivity to housing market dynamics, interest rate risks

Collateralized Loan Obligations (CLOs)

Pooling of corporate loans, diversified exposures

Bank loans to corporates, corporate asset-backed pools

Emphasis on loan refinancing, underlying corporate credit performance (Lord Abbett).

Corporate Securitizations

Issuance structures based on non-real estate cash flows

Trade receivables, equipment leases, and other commercial securitizations

Typically reflect underlying business cycles and operational performance

Specialty/Industry Specific Assets

Tailored to niche financing needs

Timeshare securitizations, transportation assets (aircraft, container, railcar), utility-related securitizations

Subject to sector-specific risks and economic trends, such as delinquencies or supply-demand imbalances (S&P Global).

Behavioral Segment

Key Attributes

Data Points and Metrics

Indicative Trends/Usage Cases

Trading and Liquidity Patterns

Reflects frequency and volume trends

Market liquidity, trading volume, bid-ask spreads, turnover rates

Institutions versus retail often show differentiated liquidity profiles; high-liquidity segments often demonstrate lower volatility (BlackRock).

Delinquency and Default Trends

Monitors asset performance and credit quality

Default rates, delinquency ratios, recovery rates from securitized assets

Higher-risk segments such as some consumer ABS or timeshare products exhibit dynamic behavior in response to household balance sheet strength (Moody’s).

Prepayment and Renewal Patterns

Tracks repayment behavior and refinancing cycles

Prepayment speeds, duration metrics, refinancing frequencies

Asset classes like RMBS and CLOs see variability in prepayment rates based on interest rate changes and economic cycles (S&P Global).

Metric

Value

Notes/Source

Latest New Issue Volume (FY2024)

~$325 billion

KBRA report (KBRA)

Projected New Issue Volume (FY2025)

~$345 billion (approx. 6% increase)

KBRA forecast (KBRA)

Outstanding Balance (Initial Pool)

~$411.5 billion

Data as of Oct 31, 2024 (KBRA)

Additional Data Sources

SIFMA ABS Statistics

SIFMA

Metric

Value

Notes/Source

Latest New Issue Volume (2024, US Market)

~$202 billion in new issuance deal volumes

Deutsche Bank Research (Deutsche Bank)

Additional Volume Metrics

~$223 billion in resets; ~$38 billion in MM/private credit deals

Indicates strong market activity in related segments (Deutsche Bank)

CLO ETFs AUM Growth

From ~$2.25 billion (2023) to over ~$20 billion

Reflects rapid market adoption (Deutsche Bank)

Data Source

URL

Focus Area

KBRA Report

https://www.kbra.com/publications/SHKwvGQX

ABS issuance and dynamics

SIFMA

https://www.sifma.org/resources/research/statistics/us-asset-backed-securities-statistics/

U.S. ABS statistics

Deutsche Bank

https://flow.db.com/trust-and-agency-services/outlook-for-clos-in-2025-reason-for-optimism

CLO issuance and market TAM

Segment

Assumed Market Share

Estimated SAM ($ Billion)

Consumer ABS

~65%

~221

Commercial ABS

~35%

~119

Total ABS Market

100%

~340

Metric

Estimated Value ($ Billion)

Annual CLO Issuance

~60 (assumed estimate)

Structured Finance Segment

Estimated SAM ($ Billion)

ABS

~340

CLO

~60

Total SAM

~400

Metric

Value/Trend

Source

Issuance Growth

Approximately 8% growth in 2024

SIFMA

Dominant Asset Class

Auto loan ABS (nearly 50% of total volume in recent years)

S&P Global Ratings

Key Drivers

Record auto loan issuances, increased sub-sectors like leases and esoteric asset ABS

S&P Global Ratings

Risk/Challenges

Consumer credit performance, rising delinquencies, interest rate sensitivity

Moody's

Metric

Value/Trend

Source

New Issuance Volume

$191 billion in new CLO issuances (72% YoY increase as of late 2024)

LSTA

Total CLO Volume

Over $465 billion in total volume; market size around $1.046 trillion post-amortizations

LSTA

Market Segment Growth

Notable expansion in private credit CLOs (16% growth, new issuance of $36B)

LSTA

Key Players Dominance

Dominant players in CLO ETFs: Janus Henderson (~76% share), BlackRock, Invesco, PGIM

Dechert; S&P Global Ratings

Segment

Factor

Potential SOM Capture (Realistic Assessment)

ABS

Stable issuance volumes & maturing market infrastructure

20% - 40% among top players

ABS

Exposure to consumer credit risks and moderate market fragmentation

Lower capture potential for some players

CLO

Strong investor demand for floating-rate instruments and record issuance volumes

40% - 60% among dominant players (e.g., established CLO managers and ETF providers)

CLO

Regulatory clarity on Basel III, Corporate Transparency Act, and ESG provisions

Enhanced market share for compliant and agile players

Year/Period

ABS Issuance Volume Trend

CLO Issuance Volume Trend

2018-2019

Baseline levels; steady flow in structured finance issuance

Moderate issuance; largely traditional structures

2020 (Pandemic)

Volatility observed; lower issuance in some ABS segments due to market uncertainty

CLOs exhibited strength; near-zero defaults helped maintain issuance momentum

2021

Recovery phase with stable volumes; ABS performance supported by improved credit metrics

Notable performance improvement; few defaults helped issuance remain buoyant

2022

Mixed performance; certain segments (e.g. auto ABS) recorded increases (e.g., up to +18% YoY in auto ABS)1

New issuance volumes began to respond to rising private credit demand with refinancing and reset activity reported2

2023-2024

Issuance volumes recovered with renewed investor interest; overall market-wide structured finance issuance up significantly (e.g., up 58% YoY in Q2 2024)2

CLO market continued strong performance with robust investor appetite; private credit CLOs in particular saw marked volume increases3

Category

Default Rate Characteristics

Notable Data Points

ABS

Generally very low default rates

Average default rates typically below 1% for investment-grade segments; non-investment-grade ABS in specialized asset classes show slightly higher but modest defaults4

CLOs

Exceptionally low defaults in recent years

CLOs experienced zero defaults in 2020 and only five defaults in 2021, reflecting robust underwriting and credit quality5

Category

Liquidity Attributes and Trends

Key Considerations

ABS

High liquidity overall; enhanced by regular reporting

Transparent performance reports and active market participation support liquidity; however, less common ABS types can face valuation risks1

CLOs

Generally strong liquidity under favorable market conditions

Investor demand remains robust; during stress periods, liquidity can be impacted but remains resilient due to diversified structures and active management3

Factor

ABS

CLOs

Issuance Volumes

Recovery from volatility with a strong rebound noted in Q2 2024

Rebound in issuance backed by low default environments and increased private credit demand

Default Rates

Consistently low, particularly in investment-grade segments

Exceptionally low defaults, with minimal incidents during market stress periods

Market Liquidity

High transparency and frequent performance reporting bolster liquidity; some segments face risks

Strong investor appetite supports liquidity, though market stress can affect pricing dynamics

Parameter

ABS

CLO

Base Year (2024) Issuance/Outstanding

ABS issuance ≈ $325 billion

Approx. $202 billion in new issuance*

Growth Rate

~6% YoY (based on KBRA & AAM outlook)

~5% YoY (conservative projection based on market trends and CLO ETF growth)

Forecast Period

6 years (2024–2030)

6 years (2024–2030)

Notes

Data from S&P Global, KBRA, AAM and Moody’s support a stable recovery and growth scenario

Deutsche Bank and industry sources note incremental increases amid growing investor demand and evolving market structure

Year

Estimated ABS Issuance ($ Billion)

Annual Growth Rate (%)

2024

325

Baseline

2025

345

~6%

2026

366.7

~6%

2027

388.7

~6%

2028

412.2

~6%

2029

436.9

~6%

2030

463.0

~6%

Year

Estimated CLO New Issuance ($ Billion)

Annual Growth Rate (%)

2024

202

Baseline

2025

212

~5%

2026

223

~5%

2027

234

~5%

2028

246

~5%

2029

259

~5%

2030

272

~5%

Segment

Base Value (2024)

2030 Projected Value

Implied Compound Growth Rate

ABS

$325 billion

$463 billion

~6%

CLO

$202 billion

$272 billion

~5%

Source

URL

KBRA ABS Outlook

KBRA Report

Deutsche Bank CLO Outlook

Deutsche Bank Report

S&P Global Outlook

S&P Global

AAM Structured Products

AAM Company

Moody's Structured Finance

Moody’s

Data Source

Description

Example URLs

SIFMA Capital Markets Fact Book

Annual reference consolidating comprehensive data on capital markets, including investor participation and securities trading data.

SIFMA Fact Book

CB Insights Market Sizings

Aggregated expert market size estimates across global segments including structured finance, with drill-downs by region and audit trails by source.

CB Insights Market Sizings

MarketsandMarkets Research

Provides detailed market research reports and trend analysis, useful for segmenting and assessing market sizing in structured finance.

MarketsandMarkets

SRP Structured Products Data

Offers historical and real-time market intelligence on structured products, with datasets on sales volume and performance trends across structured finance.

SRP Structured Products

Data Source

Description

Example URLs

Federal Reserve and U.S. Treasury Reports

Data on fixed income issuance, repo market statistics and other government sourced financial statistics that underpin market sizing in structured finance.

Data available via various Federal Reserve Bank publications and U.S. Treasury reports.

U.S. Asset Backed Securities (ABS) Statistics

Provides issuance, trading, and outstanding data on ABS segments, crucial for sizing the structured finance market.

SIFMA ABS Statistics

US Fixed Income Market Structure Primer

Detailed primer on fixed income market structure, covering US Treasuries, MBS, corporates and other asset classes in structured finance.

SIFMA Primer

Data Source

Description

Example URLs

SIFMA and Other Financial Data Aggregators

Comprehensive databases that integrate diverse financial data including issuance volumes, trading activity, and market trends in fixed income and structured products.

SIFMA Fact Book

CB Insights

Well-regarded database aggregating market sizing data and analyst consensus for various structured financial segments.

CB Insights

Data Source

Description

Example URLs

Datrics for Financial Services

Provides AI-powered risk analytics, including credit risk models and anomaly detection solutions tailored for the structured finance landscape.

Datrics

EagleAi and DeepRisk.ai

Platforms offering AI-based risk management solutions that utilize machine learning, anomaly detection, and time-series trend prediction for financial risk modeling.

EagleAi, DeepRisk

Effectiv.ai

AI & ML risk management platform focused on integrating case management with real-time detection of trading and credit risks.

Effectiv

Data Source

Description

Example URLs

Deloitte on Blockchain in Securitization

Analysis on how blockchain and smart contracts can streamline securitization processes, reduce costs, and enhance transparency in the structured finance lifecycle.

Deloitte Blockchain in Securitization

Securitize Platforms

Fintech solutions that use blockchain technology for digital securities issuance, improving compliance and market transparency in securitization processes.

Securitize

Various STO and Blockchain Development Firms

Firms such as Hashlogics and Blockchain App Factory provide insights into tokenization processes and secure digital asset issuance for structured finance applications.

Hashlogics

Methodology

Definition

Key Steps and Data Sources

Advantages

Limitations

Citations

Top-Down

Starts with broad market-level figures and apportions segments to ABS and CLOs.

1. Begin with national or aggregate structured finance statistics (e.g., overall market size, GDP contribution).2. Apply secondary research from industry reports such as SIFMA or SP Global to isolate the share for ABS and CLOs.3. Use macro data and regulatory filings.

Quick estimation; utilizes reliable, aggregated data; captures macro trends.

May overlook granular, transaction-level details; less effective for niche sub-segments.

SIFMA (2024) Wikipedia

Bottom-Up

Aggregates micro-level data from individual ABS or CLO transactions or issuances.

1. Collect individual transaction data and issuer-specific information.2. Analyze data from primary sources like issuer reports, Federal Reserve financial accounts, and industry databases.3. Sum the aggregated values to form a complete market picture.

Provides a detailed and granular view; captures nuances in market segments; useful for in-depth analysis.

Data intensive; subject to inconsistencies in reporting; may require extensive reconciliation.

FEDS (2019) Wikipedia

Hybrid

Combines elements of both top-down and bottom-up approaches.

1. Start with a top-down macro assessment.2. Validate and adjust with bottom-up data extrapolated from micro-level sources.3. Reconcile differences and refine market estimates to improve accuracy.

Balances broad market trends with detailed nuances; mitigates limitations of individual methods; leads to more robust estimates.

Increased complexity in data reconciliation; requires access to both aggregated and granular data sets.

SIFMA (2024) FEDS (2019)

Approach

Data Requirements

Time Horizon

Typical Use Case

Top-Down

Aggregated market data, national statistics, regulatory reports.

Short to medium term.

Early-stage market sizing; strategic overview analysis.

Bottom-Up

Detailed individual transaction data; issuer and deal-level data.

Medium to long term.

Detailed market segmentation; portfolio risk analysis.

Hybrid

Combination of both aggregated and detailed data; reconciling sources.

Both short and long term.

Comprehensive market analysis; robust forecasting models.

Data Segment

Top-Down Data Sources

Bottom-Up Data Sources

ABS Market (e.g., consumer, auto, CMBS)

Industry statistics from SIFMA, market research reports.

Issuer reports, individual deal disclosures, rating agency data.

CLO Market (e.g., leveraged loans)

Federal Reserve Financial Accounts, broad market indices.

Detailed loan-level information from CLO portfolios; SPV disclosures.

Source

Title/Report

Published Date

Type

URL Citation

S&P Global Ratings

2025 U.S. And Canada Structured Finance Outlook

2024-12-18/2025-01-01

Expert Report / Credit Research

S&P Global

Moody's

Global Structured Finance Outlook 2025

2024-12-17

Expert Analysis / Outlook

Moody's

KBRA

2025 Structured Credit Sector Outlook / U.S. Structured Finance Outlook Slide Deck

2024-11-18/2024-12-13

Sector Outlook / Slide Deck

KBRA / KBRA Slide Deck

Fitch Ratings

Borrower Pressures Weigh on NA Structured Finance Outlooks in 2025

2025-09-12

Analysis / Commentary

Fitch

The Alacra Store

U.S. Structured Finance Chart Book: February 2025

2025-02-21

Credit Research / Data Dashboard

Alacra Store

CBRE

2025: A New Era of Activity (Debt Markets Commentary)

2024-12-17

Market Commentary / Expert Analysis

CBRE

Source

Credibility Factors

Analysis Summary

Citation

S&P Global Ratings

Established credit ratings, detailed analytical framework, consistent historical performance

Provides comprehensive, data-driven outlooks with a focus on transaction structures and collateral analysis in structured finance markets.

S&P Global

Moody's

Global reputation, rigorous methodology, sound macroeconomic analysis

Employs robust, globally recognized methodologies that align market trends with economic indicators, ensuring reliable forecasting.

Moody's

KBRA

Specialized in structured credit analysis, detailed sector-specific insights

Delivers tailored research on structured credit sectors with emphasis on forecast trends and deal formation catalysts, bolstering investor confidence.

KBRA

Fitch Ratings

Widely recognized credit rating agency, robust research on borrower dynamics and market pressures

Provides focused commentary on market vulnerabilities and borrower pressures, reinforcing its credibility through historical performance data.

Fitch

The Alacra Store

Aggregates detailed financial data and charts from reputable sources

Offers accessible, data-driven charts and indicators, enhancing transparency though secondary in nature compared to primary research reports.

Alacra Store

CBRE

Market expertise in real estate finance, updated industry insights, practical commentary

Combines detailed market analysis with enterprise-level insights, addressing macro trends in structured finance with practical implications for market participants.

CBRE

Key Aspect

Details

Consistency

All sources apply consistent, data-driven methodologies and several are backed by established credit rating agencies

Transparency

Analytical frameworks and underlying data sets are publicly detailed and transparent, particularly in expert reports

Industry Recognition

Each source—especially S&P Global, Moody's, KBRA, and Fitch—is widely recognized and relied upon by financial professionals

Expert Credibility

CBRE and The Alacra Store provide supplemental market commentary and data visualization, adding to the overall analysis

Product Category

Description

Key Characteristics

Examples & Market Insights

Asset-Backed Securities (ABS)

Securities backed by pools of assets such as auto loans, credit card receivables, or equipment leases

Cash flows solely dependent on contractual asset performance; subject to prepayment, extension, and liquidity risks

Consumer, commercial, and non-traditional ABS segments; see Guggenheim Investments source

Collateralized Loan Obligations (CLOs)

Securities backed by a diversified pool of leveraged loans

Structured in tranches with varying credit ratings; more active management by a servicer; benefits from loan refinancing activity

Middle market CLOs are noted for ongoing issuance and competitive returns; see S&P Global and AAM Company reports source

Customer Type

Description

Typical Investment Requirements

Representative Investors

Institutional Investors

Large entities that invest significant capital; manage diversified portfolios

Demand stable, yield attractive securities; require thorough risk assessment and compliance with regulation

Pension funds, insurance companies, banks, asset managers; noted in structured finance market insights source

Retail/Individual Investors

Gaining exposure through funds or ETFs offering layered credit exposure

Lower minimum investments; indirect exposure to structured products

Investors via ETFs that target senior or mezzanine tranches in CLOs, among others source

Risk Profile

Description

Key Risk Factors

Notes & Considerations

Investment Grade

Securities with high credit quality, typically structured with overcollateralization and robust cash flow provisions

Credit, liquidity, and market risks; less sensitivity to asset quality deterioration

Most senior tranches of ABS and CLOs; often rated by major agencies source

Non-Investment Grade/High Yield

Securities with lower credit ratings, higher yield potentials, and increased volatility

Exposure to credit defaults, interest rate changes, and economic cycles

Mezzanine or subordinated tranches; may benefit from active management to mitigate risk source

Sector-Specific & Specialized Risk

Segmented by underlying asset classes or sectors (e.g., consumer, transportation, renewable energy)

Varies with asset quality, economic conditions, and specific market dynamics

Customized risk assessments based on performance indicators and macroeconomic factors source

Segmentation Aspect

Interconnection with Other Segments

Key Relationship

Product & Customer

Different product structures cater to various institutional and retail needs.

Institutions prefer investment grade tranches in ABS and CLOs for stable yields, while retail exposure is often via aggregated vehicles like ETFs.

Product & Risk

Structured products are designed with tiered risk profiles via tranching.

Tranche structure allows for allocation of risk, accommodating both secure and higher-yield investments.

Customer & Risk

Investor appetite varies with risk tolerance and mandate requirements.

Institutional investors favor lower risk segments, ensuring compliance with regulatory frameworks and portfolio diversification.

Segment

Issuance Volume & Growth Trends

Default Rates & Credit Performance

Liquidity Trends

Solar

Qualitatively expected growth; no specific volumes provided.

Not specifically detailed; ratings expected to remain stable.

No numerical data; qualitative outlook stable.

Timeshare

Issuance volume projected to remain steady amid evolving consumer costs.

Impacted by rising delinquencies but qualitative outlook stable.

Liquidity trends not numerically defined; moderate risk indicated.

Transportation – Aircraft

Issuance volume remains strong with robust deal activity noted.

Stable asset fundamentals; fewer default concerns mentioned.

Liquidity appears healthy given strong underlying asset utilization.

Transportation – Container/Railcar

Issuance expected to soften moderately due to global trade and tariff headwinds.

No specific default percentages provided; rating trends remain stable to slightly positive.

Liquidity trends are not quantified but remain supported by collateral fundamentals.

Triple-Net Lease

Issuance volume experience steady demand; evolving performance noted in retail-oriented portfolios.

Higher incidences of delinquencies and tenant bankruptcies observed.

Liquidity may become tighter for shorter ARD periods; qualitative assessment only.

Utility-Related Securitization

Issuance poised for growth supported by financing clean energy projects.

Historically stable performance; no detailed default rate provided.

Liquidity trends remain stable as seen in broader market conditions.

Segment

Trend Highlights

Institutional Demand Impact

Interest Rate Impact

Regulatory Changes Impact

Residential Mortgage-Backed Securities (RMBS)

Significant volume growth with forecasted origination surpassing $2.1 trillion; strong mortgage servicing rights (MSR) valuations.

Increased investor appetite for high-quality and liquid mortgage assets along with strong MSR valuations.

Mortgage rates are expected to remain stable near 6.4% with forward treasury yields trending lower (4.2-4.3%), impacting refinancing.

New risk-based capital requirements and adjustments in housing finance regulations; expiration concerns for TCJA impacting tax provisions.

Non-Agency RMBS

Issuance expected to increase by around 16% in 2025 (projected $160 billion) driven by housing price appreciation in non-conforming loan segments.

Institutional investors see opportunity in non-traditional mortgage loans outside conforming limits.

Interest rate spreads tied to the 10-year treasury remain crucial as relative yields drive refinancing and pricing.

Regulatory scrutiny on risk retention and adjustments in capital frameworks; evolving disclosure rules affecting market pricing.

Asset-Backed Securities (Consumer ABS)

Improving credit performance amid macro normalization; stabilization driven by easing inflation and modest rate improvements.

Demand benefits from robust secondary market activity and diversification of credit portfolios.

Declining rates and lower spreads contribute to enhanced refinancing and reduced borrowing costs.

Regulatory attention on digitalization, enhanced compliance (RegTech solutions), and streamlining reporting requirements.

Collateralized Loan Obligations (CLOs)

Issuance boom driven by refinancing and reset activities; record new-issue volumes supported by tighter liability spreads.

Strong institutional demand fueled by pro-business regulatory signals and diversification across credit sectors.

Continued rate declines have allowed existing CLOs to refinance at lower costs, widening the equity arbitrage margins.

Anticipated rollback of certain enforcement actions and capital requirements under pro-business policies enhances appetite for CLO investments.

Driver Category

Key Factors and Trends

Example Data/Observations

Citation

Institutional Demand

Growing appetite for high-yield structured products, enhanced secondary market liquidity, and diversification across credit assets.

CLO equity arbitrage remains attractive; increased mortgage servicing right transactions boost liquidity.

Moss Adams; Nuveen

Interest Rate Shifts

Stable but evolving rate environment; forward treasury yields and refinancing spreads critical to pricing and asset performance.

Forecasted mortgage yield curves and spread compression have boosted refinancing; modest decreases in base rates seen in refinancing segments.

Moody's

Regulatory Changes

Adjustments in risk-based capital rules, rollout of RegTech solutions, and potential rollback of proposed enforcement actions.

New risk-based capital guidelines effective by late 2024; evolving tax legislations such as TCJA; pro-business regulatory shifts anticipated in CLO markets.

Freshfields; Deloitte

Factor

Impact Overview

Institutional Demand

Drives higher issuance volumes in RMBS, non-agency transactions, and CLO markets. Strengthened by robust secondary market and diversification strategies.

Interest Rate Shifts

Affect pricing, refinancing activity, and spread compressions across segments; stable rates are key to maintaining refinancing attractiveness.

Regulatory Changes

Influence capital requirements, risk retention, and compliance practices, which in turn shape product structures and investor appeal.

Institution

Category

Market Share Data

Source

Bank of America

Major Bank

Not provided; noted as a frequent issuer

AAM Outlook 2025

JP Morgan

Major Bank

Not provided; active in CLO issuance process

AAM Outlook 2025

Other U.S. Banks and Insurance Companies

Major Issuers/Investors

Information on increasing allocations reported; specific market shares not provided

AAM Outlook 2025

Advisory/Law Firm

Specialty

Market Share Data

Source

Latham & Watkins LLP

ABS/CLO transaction counsel

Not provided

Chambers: ABS

Mayer Brown LLP

ABS/CLO advisory

Not provided

Chambers: ABS

Paul Hastings LLP

ABS/CLO advisory

Not provided

Chambers: ABS

Weil, Gotshal & Manges LLP

Structured Finance legal counsel

Not provided

Weil, Gotshal & Manges LLP

Product Type

Projected Issuance Volume

Remarks

Source

ABS

Approximately $340 billion

Indicates record-breaking activity with high issuance expected

AAM Outlook 2025

CLOs

Approximately $180 billion

Expected to be absorbed by a broad market; relative market shares not provided

AAM Outlook 2025

Strategic Focus

Approach

Implementation Example/Notes

Benefits

Marketing

Customer-centric, integrated digital ecosystems

Leveraging digital marketing, integrated fintech platforms (e.g., Cash App ecosystem by Block) with clear branding and customer engagement strategies; using platforms to articulate differentiated product offerings Greenwich.

Enhanced customer reach and engagement; increased brand loyalty

Pricing

Dynamic pricing models informed by AI-driven risk analytics

Utilizing AI-driven risk modeling to assess risk-adjusted pricing and optimize structured finance products; pricing that reflects real-time market data and risk profiles as seen in innovative fintech initiatives PwC.

More competitive and flexible pricing; improved profitability and risk control

Distribution

Omnichannel and blockchain-enabled distribution

Distribution through digital platforms with the integration of blockchain for secure, transparent settlement processes; innovative distribution channels that reduce reliance on traditional intermediaries, enabling quicker asset transfer and broader reach Retail Banker International.

Streamlined transactions; reduced costs; enhanced transparency through distributed ledgers

Innovative Techniques

AI-driven risk modeling and blockchain applications

Advanced AI technologies are implemented to model risk and facilitate credit decisions; blockchain is used for digital clearing, trade settlement, and ensuring traceability in financial transactions to foster trust and efficiency PwC; Retail Banker International.

Lower operational risk; more accurate assessments; improved process automation; fraud reduction

Aspect

Details

Messaging

Focus on customer-centric communication and clear differentiation

Digital Ecosystem

Integration of various financial products using fintech platforms (e.g., payment apps, lending tools)

Brand Positioning

Emphasizing innovation through technology adoption and agile product offerings

Aspect

Details

Risk-adjusted Pricing

Using AI to model credit risk and dynamically adjust interest rates and fees

Data-driven Analytics

Continuous input of market data and risk indicators enables more competitive pricing strategies

Competitive Offers

Integration of pricing techniques with real-time market feedback ensures competitiveness

Aspect

Details

Digital Channels

Utilizing online and mobile platforms for product distribution

Blockchain-ledgers

Employing blockchain to record and verify transactions ensures secure and transparent distribution channels

Omnichannel Integration

Combining traditional channels with innovative electronic transfers to improve asset liquidity

Technology

Application in Structured Finance

AI-driven Risk Modeling

Algorithms assess risk profiles in real time; used for pricing adjustments and credit decision automation

Blockchain

Facilitates real-time settlement, enhances transaction security, and improves traceability in asset transfers

Automation

Streamlining processes such as onboarding, position transfers, and payment processing; reduces manual inefficiencies

Structured Product Type

Key Characteristics & Sector Trends

Strengths

Weaknesses/ Challenges

Source Citation

Asset-Backed Securities (ABS)

Includes solar, timeshare, and transportation deals. Demand is driven by underlying asset performance (e.g., solar generation growth, consumer behavior in timeshare, etc.). Ratings and issuance volumes are influenced by interest rates and economic conditions.

- Solar: Growth potential through expanding generation capacity S&P Global.- Transportation: Stable asset utilization and upgraded ratings in aircraft deals.

- Timeshare deals: Elevated delinquencies and credit strain.- Transportation container deals: Vulnerable to tariffs and global trade shifts S&P Global.

S&P Global Ratings

Agency Mortgage-Backed Securities (MBS)

Issuance expected to be stable; significant participation by domestic banks; technical tightness due to limited mortgage supply and attractive coupon spreads.

- Attractive for banks in a low-rate environment.- Tighter spreads and technical positioning favorable for retail investors.

- Exposure to housing market fluctuations and potential later-year rate volatility.

AAM Company PDF

Commercial Mortgage-Backed Securities (CMBS)

Involves commercial real estate exposure. Despite challenging sectors in office properties, well-positioned high-quality assets continue to generate excess returns.

- Resilient performance in quality segments as property valuations begin to stabilize.

- Vulnerability in B and C quality properties and exposure to office market headwinds.

AAM Company PDF

Collateralized Loan Obligations (CLOs)

Variable rate structures that benefit from rate cuts; offer higher overall yields. Tend to be attractive despite exposure to refinancing risks amid interest rate changes.

- Higher nominal returns and diversified credit exposure.- Ongoing investor interest including bank and insurance company allocations.

- Susceptible to refinancing challenges and macroeconomic shifts if rate cuts exceed expectations.

JP Morgan & AAM Company

Participant Category

Role in the Market

Strengths

Weaknesses/ Challenges

Market Share Implications

Domestic Banks

Primary buyers and investors in Agency MBS; significant issuers in structured finance.

- Strong capital base- Familiarity with mortgage and ABS structures- Expected to increase participation with lower interest rates AAM Company.

- Exposure to cyclical risks in the housing market- Sensitivity to interest rate movements.

Historically significant; poised for increased share in Agency MBS as liquidity improves.

Specialized Asset Managers & Issuers (e.g., JP Morgan, AAM Company, AXA IM)

Originate, structure, and distribute a variety of structured finance products.

- Expertise in structuring diverse deals (ABS, CMBS, CLOs)- Agile in responding to market dynamics and regulatory changes JP Morgan.

- Exposure to refinancing cycles- Vulnerability to rate changes affecting deal economics.

Growing influence as structured products issuance remains high; competitive dynamics drive market share shifts.

Financial Sponsors & Originators

Create and package asset pools into structured products.

- Ability to innovate and structure deals across diverse sectors (consumer, commercial, specialty) Moody's.

- Facing credit quality challenges in certain niche sectors- Dependent on underlying asset performance.

Niche players that capture portions of the market based on deal quality and underwriting criteria.

Rating Agencies

Not direct market participants, but provide scoring and analysis that influence market dynamics.

- Extensive market data and analytical capabilities to guide pricing and risk management S&P Global.

- Their assessments can trigger market adjustments during economic shifts.

Indirect influencers; their reports shape investor perceptions across all participant categories.

Detail

Observation

Data Availability

Quantitative Market Shares

Detailed market share percentages for individual players are not explicitly provided in current reports.

Limited by published detail in available public sources

Qualitative Market Dynamics

Market share and competitive positioning are influenced by issuer expertise, liquidity conditions, and regulatory environment.

Derived from trend analysis across multiple publications

Market Driver

Description

Supporting Data/Source

Institutional Demand

Increased allocations by banks, insurance companies, and the expanded role of CLO ETFs. Institutional investors are attracted by stabilized credit fundamentals and competitive returns.

KBRA report and AAM Company outlook [KBRA], [AAM]

Interest Rate Movements

Adjustments in monetary policy—such as rate cuts leading to tighter spreads and a heightened focus on floating-rate instruments—are driving refinancing and reset activities, particularly in CLO issuance.

KBRA report discusses rate cuts and forecasted tightening [KBRA], [DB]

Regulatory Changes

Evolution in capital requirements and regulatory frameworks has prompted banks to increase their issuance activities, with new guidelines influencing underwriting standards and investor allocations.

S&P Global Ratings outlook highlights increased bank issuance in response to new capital requirements [S&P Global]

Factor

Impact on Resurgence

Relationship to ABS/CLOs Overview

Institutional Demand

Drives volume with diversified holdings; growth of CLO ETFs enhances retail as well as institutional engagement; strong appetite for high-yield, structured credit instruments.

Strong allocation changes by both banks/insurance companies and increased ETF AUM highlight market participation [AAM], [DB]

Interest Rate Movements

Lower interest rate environments and subsequent monetary adjustments improve refinancing profiles and boost credit spreads, making ABS more attractive relative to other fixed income products.

Rate adjustments spur refinancing (refi/reset activities) and help stabilize credit fundamentals; floating rate features particularly benefit CLOs [KBRA]

Regulatory Changes

Enhanced capital requirements and updated regulatory policies push issuers to optimize securitization structures; more robust underwriting standards bolster investor confidence.

Regulations impact bank participation and drive demand for structured products, influencing both issuance and spreads [S&P Global]

Metric/Indicator

ABS/CLO Context

Data/Source

ABS New Issue Volume (2024 benchmark)

Record-breaking issuance in ABS market

~$325 billion (FY 2024 projection) from KBRA research [KBRA]

CLO ETF Growth

CLO ETFs growing in AUM, expanding investor base

From US$2.25bn in 2023 to over US$20bn by end of 2024 as per Deutsche Bank report [DB]

Challenge Type

Details

Impact

Sources

Credit Volatility

Fluctuations in credit quality cause uncertainties related to underlying asset performance and default probabilities.

Increased uncertainty, rising default risk spreads, difficulties in accurately pricing collateral and structured products.

S&P Global Ratings (PDF)

Regulatory Scrutiny

Enhanced focus on transparency and disclosure; evolving frameworks such as SEC disclosure requirements and Basel III proposals.

More granular reporting requirements, increased compliance costs, and need for higher transparency in disclosing deal terms.

Deloitte

Operational Risks

Complexities in deal structuring that include valuation challenges, mark-to-market issues, and liquidity constraints.

Difficulties in real-time risk management, delayed recognition of credit deterioration, and potential for mispricing.

BNY Insights

Aspect

Interaction with Other Challenges

Description

Volatility & Regulation

Heightened market sensitivity requires more comprehensive disclosure and valuation practices.

As credit volatility increases, regulators demand more detailed data to enable effective oversight, intensifying compliance burdens.

Regulatory & Operational

More stringent rules lead to operational complexities in maintaining compliance.

Operational systems must evolve to capture and report necessary data in a timely manner.

Volatility & Operational

Unstable market conditions complicate accurate transaction processing and asset valuation.

Increased volatility can delay or distort the marking process, affecting operational decisions and risk management.

Buyer Segment

Description

Key Investment Channels

Representative Investment Vehicles

Insurance Companies

Typically allocate large portions of their portfolio for yield enhancement; invest in investment-grade ABS and senior CLO tranches to match long-duration liabilities (AAM Company).

Direct investments, specialized funds

ABS portfolios, senior tranches of CLOs

Banks

Actively participate in structured products to diversify investments and manage balance sheet exposures, often leveraging their credit and market expertise (SIFMA).

In-house trading, asset management arms

Structured credit facilities, ABS instruments

Pension Funds

Seek long-term, stable return streams to match their liability profiles, focusing on asset classes with predictable cash flows (Moody's).

Dedicated fixed-income portfolios

ABS, CLO equity and debt structures

Asset Managers

Utilize robust capital and risk management strategies to capture spread and diversification benefits; have driven adoption of ETF structures providing granular exposure (Nuveen).

Investment funds, ETFs

Diversified structured credit funds, CLO holdings, multi-tranche funds

Hedge Funds

Leverage opportunistic strategies to target higher-yield tranches in ABS and CLO capital structures under varying market conditions

Opportunistic investments, secondary market trading

Junior CLO tranches, lower-rated ABS tranches

Buyer Segment

Description

Typical Investment Focus

Additional Notes

ETF Providers

Develop vehicles that package diversified exposures to multiple layers of the credit stack, enabling retail participation (AAM Company).

Multi-layer credit exposure in CLOs and ABS

Bridge gap between institutional and retail markets

Private Credit Platforms

Emerging players that target spread arbitrage opportunities, often complementing institutional exposures in structured finance markets

Select CLO and ABS exposures, often in non-core tranches

Provide alternative liquidity channels and diversification benefits

Aspect

Details

Scale and Investment Size

Investments typically run to billions of dollars annually; portfolios are managed by large firms with capabilities for both new issue and secondary market trades.

Risk Management

Investors emphasize clean, lower-spread portfolios and actively push for derisking efforts in CLOs, especially during refinancing (Nuveen).

Market Dynamics

Robust reset and refinancing activity in CLOs and steady ABS issuance volumes indicate market stability and a consistent appetite among institutional buyers (S&P Global Ratings).

Factor

Observations/Impact on Structured Finance

Key Data/References

Economic Conditions

- Slowdown in overall US economic growth and moderation in consumer spending can depress credit quality and impact asset performance. - Deterioration in structured finance, especially for CMBS, ABS, and RMBS, has been noted due to weaker credit performance and potential trade-tariff pressures.

- Fitch Ratings report notes evolving risks related to higher import tariffs affecting consumer prices and asset performance (https://www.fitchratings.com/research/corporate-finance/us-economic-growth-to-slow-with-evolving-risk-environment-11-02-2025). - Moody’s and Ameriprise outlooks provide further context on slowed growth and credit conditions.

Technological Advancements

- Advances in digitization, AI, and blockchain integration are transforming the structuring and management of securitized assets. - Seamless platforms (e.g., IntainMARKETS) and integration of Web 2.0 with Web 3.0 enhance process efficiencies and transparency.

- Industry insights from technology evolution articles (e.g., via Medium: https://medium.com/intain/technology-evolution-in-structured-credit-a-peek-into-2025-728e8b2029df) and narratives on digital transformation in financial services (WeForum article: https://www.weforum.org/stories/2025/01/innovation-technology-investing-capital-markets/).

Inflation Trends

- Persistent or re-emerging inflation increases refinancing risks and may widen spreads, reducing asset quality. - Inflation uncertainty influences household balance sheets, impacting delinquencies and defaults in existing securitizations.

- S&P Global Ratings highlight inflation risk as a key concern affecting issuance and performance (https://www.spglobal.com/_assets/documents/ratings/research/101610419.pdf). - Equifax and AXA reports also address sustained inflation and its effects on credit conditions.

Federal Reserve Policies

- Gradual rate cuts and monetary easing cycles provide some relief to borrowers, although high short-term rates continue to pose challenges. - Fed’s communication and balance sheet policies influence refinancing conditions, affecting structured finance exposures.

- Ameriprise Financial and Deloitte insights explain how Fed policy influences asset prices and refinancing conditions (https://www.ameriprise.com/financial-news-research/insights/2025-market-economic-outlook). - Federal Reserve reports (e.g., February 2025 Monetary Policy Report) provide context on rate decisions.

Aspect

Impact Statement

Economic Outlook

Moderated economic growth may further stress credit quality for lower-tier assets impacting structured finance issuance and performance.

Digitization

Adoption of advanced digital platforms is lowering operational friction, increasing efficiency and transparency across securitization deals.

Inflation Concerns

Persistently high inflation raises refinancing risks and may erode asset performance, influencing ratings and investor returns on structured products.

Fed Monetary Policy

Strategic rate adjustments by the Fed help moderate borrowing costs; however, any delay or unexpected tightening could adversely affect refinancing opportunities.

Parameter

USA ABS Investors

USA CLO Investors

References

Yield

Desire attractive, risk-adjusted yields from products structured with stable cash flows and strong support from overcollateralization.

Focus on capturing yield from higher quality loan portfolios, with an emphasis on spread improvements and attractive reset features.

S&P Global Ratings; PitchBook

Transparency

Investors favor detailed, professional reporting and clear, contractual cash flow structures that reduce refinancing risk.

Preference for cleaner, actively managed portfolios which offer enhanced transparency over portfolio composition and risk mitigation techniques.

Guggenheim Investments

Risk Management

Strong structural protections including overcollateralization, performance triggers, and robust asset quality to mitigate credit and liquidity risks.

Emphasis on active portfolio management with reset mechanisms and a focus on improving loan quality; concerns include refinancing pressures and reset risk amid evolving market dynamics.

SF Credit Brief

Liquidity & Trading

Need for efficient trading platforms and standardized reporting to facilitate liquidity and ease valuation, as tracked by SIFMA statistics.

Demand for secondary market liquidity where adjustments via resets and active management can enhance tradability and pricing dynamics.

SIFMA

Diversification

Attractive as a diversification tool given the isolation from issuer-specific risks and alignment of financing terms with underlying asset performance.

Investors value diversification across asset classes and vintages, with a focus on mitigating concentrated exposure through varied loan portfolios and staggered reset periods.

PitchBook

Investor Segment

Satisfaction Drivers

Concern Areas

Comments

USA ABS

- Consistent cash flow generation via overcollateralization

Metric

Details

Average Yields

Specific numerical averages were not provided. Yields vary by asset class. Esoteric ABS (e.g., music royalty ABS, equipment loan ABS) tend to offer higher yields compared to conventional auto or credit card ABS SFA Research Corner.

Pricing Tiers

ABS are structured based on collateral quality and asset type. Common sub-categories include auto loans, credit cards, student loans, and leases. Each category is structured into tranches that reflect differences in priority of cash flow allocation.

Risk Premiums

Risk premiums differ by asset type. Products backed by more volatile receivables (e.g., esoteric or subprime auto loans) command higher risk premiums. Structural protections (such as overcollateralization or reserve accounts) also help mitigate risks, though detailed premium spreads are not specified SIFMA.

Metric

Details

Average Yields

Detailed yield figures are not provided. However, CLOs typically offer yields higher than comparably rated corporate bonds, thanks to their floating rate nature and the embedded adjustment mechanism tied to reference rates such as SOFR or Euribor Pinebridge.

Pricing Tiers

CLOs are structured into several tranches from the senior (AAA/AA ratings) to mezzanine and equity tranches. Each tranche reflects a different risk/return profile, with senior tranches having lower yields and risk premiums compared to the more junior portions.

Risk Premiums

The risk premium in CLOs increases with lower ratings. Enhanced premiums for junior tranches compensate for higher credit risk. Additionally, the floating rate nature reduces interest rate duration risk relative to fixed income alternatives. Specific spread details were not available in the provided documents.

Segment/Sub-Sector

Key Pricing Drivers

Typical Strategy Components

Unique Considerations

Consumer ABS (e.g. auto, credit card, RMBS)

Borrower financial profiles; contractual cash flow reliability; prepayment/extension risk; interest rate sensitivity

Pricing reflects expected refinancing risk, credit enhancements, and active management of static vs. reinvesting pools

Lower borrowing costs due to matching asset tenor; isolation from sponsor risk Guggenheim Investments

Commercial ABS (e.g. aircraft leases, utility-related securitization)

Asset utilization, lease rates, collateral fundamentals; market liquidity and specific asset supply-demand imbalances

Pricing incorporates overcollateralization benchmarks, performance of lease streams, and refinancing conditions under tougher economic climates

Sensitivity to broader economic factors; sector-specific supply-demand imbalances may necessitate additional credit risk premiums S&P Global Ratings

Regional/Segment Nuances

Though most ABS issuances are concentrated nationally, regional factors (such as local economic conditions or asset performance in targeted markets) can influence investor appetite and, consequently, pricing

Adjustments based on local credit performance and economic trends; specialized asset pools (for example, state-specific housing markets)

Limited data on explicit regional segmentation exists, with variations more commonly driven by asset type than geography

Pricing Aspect

New Issue CLOs

Refinancing/Middle-Market CLOs

Market Insights

Spread Levels

Initial pricing tends to factor in higher spreads, which may narrow with active management and refinancing later as market conditions improve.

Observed declines in weighted average spread (WAS); pricing benefits from manager de-risking (up to 60 basis points reduction in junior overcollateralization cushions)

Driven by high refinancing and re-pricing activity in the U.S. syndicated loan market S&P Global Ratings

Tranche Differentiation

Pricing includes demand for both senior and junior notes based on their initial ratings (investment-grade to ‘BB’ ranges)

Refinancing often shows differentiated pricing for junior tranches, where rating performance may differ from new issues; adjustments in O/C levels are used as signals for portfolio cleanliness

Active investor pressure is pushing for cleaner, lower-spread portfolios in both new and refinanced issues

Portfolio Management & Credit Quality

Emphasis laid on initial asset quality, with pricing supported by anticipated active management strategies

Investors monitor rating trends and credit performance improvements, often rewarded by lower spreads and tighter credit metrics

Market feedback has driven enhanced focus on asset selection and rebalancing strategies within CLO portfolios

Feature

ABS Pricing

CLO Pricing

Primary Drivers

Underlying asset cash flows, refinancing risk, prepayment/extension risk in consumer and commercial segments.

Credit quality, tranche rating dynamics, spread performance, and manager-led de-risking adjustments.

Segmentation Approach

Primarily by asset type – consumer versus commercial ABS – with some influence from local economic conditions.

Differentiated by issuance type (new issue vs. refinancing) and tranche (senior vs. junior), with less regional divergence.

Impact of Active Management

Active management in reinvesting ABS pools can adjust pricing via asset quality enhancements.

Active portfolio cleaning and asset rotation help reduce spreads and improve uniformity across the CLO structure.

Pricing Strategy

Description

Typical Usage

Observations / Examples

Discounting

Securities are priced below par, enhancing yield to drive investor interest

Often applied in Agency MBS and ABS sectors in a competitive liquidity environment

Many Agency MBS trade at significant discounts, reflecting higher yield opportunities to compensate for risk (S&P Global)

Bundling

Aggregation of multiple underlying assets to create diversified cash flows

Common in bundling various asset classes such as auto loans, consumer loans, or mortgage pools

Bundled asset-backed securities lower risk through diversification; strategies are often tuned for enhanced credit ratings (Market Research Future)

Premium Pricing

Securities are marketed with a premium price based on strong credit or brand, reflecting lower perceived risk and high-quality collateral

Utilized for high-quality, investment-grade assets where strong ratings and market reputation allow for less discounting

Premium pricing is evident where robust collateral metrics and brand strength allow issuers to command higher prices, directly reducing risk premiums (S&P Global)

Consideration

Details

Market Liquidity

Competitive dynamics force issuers to adjust pricing (discount or premium) to attract investor demand

Asset Quality & Ratings

High credit quality and strong ratings can justify premium pricing; lower quality assets rely on discounting

Regulatory Environment

Changing regulations influence capital requirements and pricing competitiveness

Investor Demand Profiles

Investors’ risk-return appetite drives bundling strategies to optimize diversification

Offering

Channel Type

Description

Method Category

ABS

Investment Banks & Syndication

Investment banks originate and underwrite ABS transactions by structuring deals and creating SPVs. The securities are then syndicated to institutional investors through dealer networks and direct placements. Guggenheim Investments

Traditional

ABS

Dealer Networks/Brokers

Brokers and dealer networks facilitate the distribution and secondary trading of ABS, helping to enhance liquidity and investor reach. SFA Research Corner

Traditional

ABS

Direct Private Placements

In private market settings, especially for esoteric ABS, limited private placements target select investor groups with tailored offerings. S&P Global Ratings

Traditional

ABS

Digital Distribution Platforms

Emerging digital platforms and fintech interfaces are increasingly being used to execute and settle ABS deals, offering faster execution and enhanced transparency. Global ABS

Emerging/Digital

ABS

Blockchain-Enabled Networks

Although early in adoption, blockchain and distributed ledger technologies provide a secure, automated, and transparent distribution process for ABS issuance and secondary trading. Market Research Future

Emerging/Blockchain-Enabled

CLO

Investment Banks & Syndication

CLOs are traditionally syndicated by investment banks after the creation of specialized SPVs. The distribution is executed via dealer networks and direct placements to institutional and qualified investors. PineBridge

Traditional

CLO

Secondary Market Trading

CLO securities trade in the secondary market, including over-the-counter and online platforms, which help in pricing and liquidity. Deutsche Bank

Traditional

CLO

CLO Exchange-Traded Funds (ETFs)

CLO ETFs provide an emerging channel that allows retail investors access, broadening the investor base and increasing liquidity. Deutsche Bank

Emerging/Digital

CLO

Direct Origination by Alternative Asset Managers

Growing alternative credit firms use direct origination – managing transactions from origination to placement across their proprietary credit platforms – thereby bypassing traditional intermediaries. SFA Research Corner

Emerging/Direct Digital

Category

Traditional Methods

Emerging Methods

ABS Distribution

Investment bank syndication, dealer networks, direct private placements

Digital platforms, blockchain-enabled execution

CLO Distribution

Conventional syndication via investment banks and dealer networks; secondary OTC trading

CLO ETFs, direct origination by alternative asset managers

Distribution Channel

Key Characteristics

Examples/Notes

Citation

Integrated Digital Platforms

End-to-end digital platforms that integrate multiple stages of the structured finance process

Platforms like IntainMARKETS combine Web 2.0 and Web 3.0 functionalities to provide seamless capital market access for regional/community banks Intain

Intain

Fintech-Bank Partnerships

Collaborative ecosystems between traditional banks and fintech firms aiming for innovative service models

Partnerships streamline client processes and offer better technical solutions to distribute structured finance deals efficiently CBRE

CBRE

AI-Driven Analytics & Distribution

Use of artificial intelligence for risk assessment, pricing, and targeted marketing channels

Deployment of AI models to match client profiles with financing products, enhance product development, and predict market trends

Deloitte

Digital Marketplaces for Capital Access

Online marketplaces that connect issuers with a broad pool of investors and liquidity providers

Automation and system integrations reduce reliance on multiple intermediaries—facilitating more transparent, cost-efficient transactions

General industry trend observed in fintech integration articles

Technology Integration Feature

Impact on Distribution Channels

Notes

API & Platform Integration

Unifies disparate processes into a single streamlined interface

Eliminates the need to separately interface with multiple SaaS products, reducing system integration costs

Blockchain & Distributed Ledger

Enhances transparency and security in transaction processing

Provides immutable records and improved trust across digital platforms

Artificial Intelligence

Optimizes pricing, risk management, and customer targeting

Accelerates product development and offers tailored financial advice, supporting an efficient digital distribution process

Automated Coding & Process Automation

Reduces operational overhead and speeds up integration across the value chain

Digital systems now enable end-to-end automation of credit, lending and product delivery processes

Regulation/Requirement

Effective Timeline

Key Requirements & Description

Impact on ABS/CLO Issuance

Citation

Basel III Endgame

Phased-in until July 1, 2025

Expands risk-based approaches for capital frameworks with a standardized or hybrid model, requiring banks to hold increased capital (e.g., a 19–20% increase on mortgages for large US banks). This impacts data collection, governance, and reporting obligations.

Affects the capital treatment and risk management practices for banks involved in securitisation transactions, including ABS and CLOs.

Lexology

SEC Rule 192 – Conflicts of Interest

Effective February 5, 2024

Prohibits securitisation participants from engaging in conflicted transactions where any party benefits from a security’s failure. Although negotiated in private deals, the rule clearly defines limitations in registered securitisations regarding investor vote and trustee remedy exercises.

Directly influences issuance structures by mandating strict disclosures and governance to mitigate conflicts, which is crucial for ABS and CLO transactions.

Lexology

FinCEN Corporate Transparency Act

January 1, 2024 (new entities); reporting begins for prior entities on January 1, 2025

Requires newly formed entities to file beneficial ownership reports within 90 days of formation. Entities must detail individuals owning 25%+ of interests and those exercising substantial control, impacting financial and securitisation SPVs.

Influences the formation and ongoing reporting obligations for special purpose vehicles (SPVs) used in ABS/CLO structures.

Lexology

EU Securitisation Regulation (Article 7)

Ongoing adjustments with periodic reviews

Mandates comprehensive transparency standards and reporting requirements. US issuers must provide all details equivalent to EU disclosure norms when targeting or servicing EU investors, thus shifting compliance responsibility.

Affects US ABS/CLO issuances marketed to EU investors, requiring alignment with European disclosure and reporting standards.

Lexology

Rule 15c2-11 Relief for Broker-Dealers

Recent regulatory relief as of October 30, 2023

Provides limited relief for quoting fixed-income securities by brokers and dealers, focusing on securities sold via exemptions (e.g., Rule 144A). This entails ensuring that requisite public information is made available before quoting or trading.

Affects the trading infrastructure and liquidity aspects for ABS, indirectly supporting efficient market functioning for structured products.

Lexology

Climate-related Disclosures (SEC Proposal)

Under review / anticipated

Proposes enhanced disclosure on environmental risks and greenhouse gas emissions. Firms must disclose how climate risks materially impact business performance, influencing issuer reporting in registration statements and periodic reports.

Enhances due diligence and risk assessment in ABS/CLO issuances by requiring broader disclosure of ESG risks.

Lexology

Risk Retention Requirements

Established guidelines (ongoing)

Mandates that originators retain at least 5% of the aggregate exposure of the underlying assets in securitisations. Exemptions exist when hedging through guarantees or credit default swaps is in place.

Directly impacts ABS issuance by ensuring a portion of risk is retained by transaction originators, safeguarding market integrity.

Dechert Structured Finance & Securitisation 2025

Legal Document/Provision

Key Elements & Requirements

Relevance to ABS/CLO Structures

Additional Details

Citation

Indenture/Note Purchase Agreement

Sets economic and structural terms (maturity, coupon, payment waterfall, transfer restrictions) and contains covenants and default events.

Primary documentation for bond or note issuances in ABS transactions.

Often includes trustee rights with indemnification and perfection provisions.

Chambers Practice Guides

Trust Agreement

Governs the issuance of trust certificates and equity tranches, outlining the management and governance of the issuer.

Critical for structuring trust-based ABS and equity tranches within securitisation.

Specifies reporting obligations, asset transfers, and investors’ voting rights.

Chambers Practice Guides

Credit Agreement

Defines terms for loans included in a securitisation, covering payment obligations, collateral maintenance and negative covenants.

Important in securitisation involving loan portfolios, including certain CLO structures.

Includes covenants on adding/removing assets to maintain the integrity of the securitised pool.

Chambers Practice Guides

Servicing/Management Agreements

Detail servicing standards, reporting obligations, and, for CLOs, portfolio management criteria under the Investment Advisers Act.

Governs asset servicing, collection, and collateral management for ABS and actively managed CLOs.

May be titled as Portfolio Management, Collateral Management, or Investment Management Agreement in a CLO context.

Chambers Practice Guides

Distribution Channel

Key Features

Efficiency Characteristics

Effectiveness Characteristics

Comments

Traditional Bank Branches & Intermediaries

Physical presence, regulated operations, in-person advisory; reliance on established trust

Slower transaction times; higher operational cost

High credibility; may be limited by geographical reach

Traditional channels ensure regulatory compliance and trust, though they lack the speed and scalability of digital channels Investopedia ExactBuyer

Broker-Dealer Networks

Involvement of registered broker-dealers; emphasis on customer suitability and know-your-customer processes

Moderately efficient; subject to regulatory checks

Highly effective in targeting qualified retail and institutional investors via advisory services

Enhanced customer due diligence improves investment match but may incur higher intermediary costs Lexology

Digital Distribution Platforms (SIMON, Halo, Luma)

Online platforms enabling order management, analytics, post-trade automation; use of advanced technology for workflow optimization

Highly efficient through automation and reduced processing times; lower notional issuance thresholds

Effective in reaching a broad audience; improved transparency, real‑time pricing, and customization; track investor behavior digitally

Digital channels facilitate swift dissemination of structured products and have been adopted by major issuers, reducing manual inefficiencies Lexology

Direct Online Channels

Direct interaction between issuers and investors over dedicated platforms; minimal intermediary intervention

Low cost and lower latency in communications

Effectively captures digitally-savvy investors; scalability aids in rapid outreach and bespoke messaging

Direct channels benefit from clear investor data tracking and lower transaction costs but require robust compliance frameworks to substitute traditional relationships

Metric

Description

Observations (Qualitative Insights)

Source & Citation

Distribution Speed

Time taken from offer to transaction execution

Digital platforms demonstrate reduced processing time compared to traditional channels

Qualitative insights from digital distribution studies Lexology

Transaction Cost

Cost per investment transaction

Automation in digital channels reduces overall costs versus manual broker-dealer fees

Market commentary Acuity Knowledge Partners

Investor Reach

Number of target investors engaged

Digital channels offer scalability and broader penetration; traditional channels rely on legacy trust networks

Observations on digital enablement trends Acuity Knowledge Partners

Customization & Transparency

Degree of tailored investor experience and clarity of pricing information

Digital platforms enhance customization and real‑time updates, improving investor engagement

Insights from structured product analytics Lexology

Aspect

Traditional Channels

Digital Channels

Speed

Slower; manual processing

Faster; automated transaction processing

Cost

Higher due to intermediaries

Lower operational costs due to technology integration

Investor Engagement

High trust; limited scalability

High scalability and broad reach; improved tracking & customization

Regulatory Oversight

Robust and well-established

Requires adaptation but increasingly integrated with digital compliance systems

Factor

Impact Description

Details

Citations

Licensing & Approval

Increased regulatory scrutiny and detailed licensing requirements.

New entrants face higher upfront capital investments and rigorous due diligence processes, creating a barrier to entry in a competitive market.

S&P Global

Compliance Requirements

Extensive documentation and periodic regulatory reviews.

Structured finance deals must comply with detailed reporting, financial disclosure, and transaction-specific standards, delaying market entry.

KPMG

Regulatory Uncertainty

Evolving regulation and shifting governmental priorities.

New market entrants must plan amidst a landscape of changing regulatory frameworks, affecting business models and entry strategies.

OCC Guidance

Cost Component

Impact Description

Details

Citations

Compliance & Reporting

Increased overhead due to enhanced regulatory reporting and monitoring requirements.

Institutions must invest in advanced technology, regtech solutions, and personnel training to maintain adherence to regulatory standards.

KPMG

Technology Investments

Higher costs associated with upgrading systems to meet evolving data security and risk management standards.

Structured finance players need to adopt integrated risk management systems and cybersecurity measures, leading to elevated operational expenses.

JPMorgan

Third-Party Risk Oversight

Additional costs to monitor and manage third-party vendors and fintech relationships.

Due diligence across the entire third-party risk management life cycle increases operational expenses, impacting profit margins.

OCC Guidance

Risk Management Component

Impact Description

Details

Citations

Enhanced Internal Controls

Mandatory adoption of comprehensive risk management frameworks and internal controls.

Regulatory guidelines require continuous monitoring, integrated risk reporting, and a proactive risk management lifecycle to mitigate exposures.

OCC Guidance

Advanced Due Diligence

Regular and thorough assessment of counterparty and market risks.

Structured finance players need to implement rigorous due diligence, encompassing credit quality, market volatility, cybersecurity, and third-party risks.

KPMG

Integrated Risk Systems

Adoption of integrated technology platforms to manage risk holistically across different operations.

Investment in regtech and data analytics enhances risk identification and management, streamlining processes to comply with evolving regulatory standards.

SIFMA

Technology

Description

Impact/Benefits

Associated Risks/Challenges

Source

AI-Driven Risk Modeling

Uses integrated machine learning and automation (invested since 2018) to enhance risk analytics and process efficiency.

Improves accuracy, streamlines product development, enhances risk assessment and decision-making.

Implementation complexity; reliance on high-quality data.

Intain Article

Blockchain in Securitization

Adopts distributed ledger technology and smart contracts to transform the securitization lifecycle.

Streamlines processes, reduces cost, accelerates transaction speeds, incorporates transparency, and creates a unified audit trail.

Data security and privacy concerns; technology maturity; legal and regulatory uncertainties.

Deloitte US

Aspect

AI-Driven Risk Modeling

Blockchain in Securitization

Adoption Timeline

Investments since 2018 are maturing.

Early stage but promising transformative potential.

Process Integration

Enables a seamless, integrated platform across processes.

Unifies data across lifecycle participants using immutable ledgers.

Efficiency Improvements

Automation leads to reduced manual intervention and faster risk analysis.

Improves pricing, volume, spreads, and overall regulatory compliance.

Regulatory Body

Proposed Regulatory Action

Technology Focus

Expected Impact on Structured Finance

Estimated Timeline

Source(s)

SEC

Enhanced reporting mandates for digital asset brokers; revised registration paths for tokens & custody framework; intensified enforcement of marketing rules; guidance for AI-powered financial tools (e.g., robo-advisors)

AI (robo-advisors), blockchain integration in digital asset transactions

Increased transparency, standardization, and integration of blockchain-enabled security products; potential adoption of AI in risk underwriting and automation in structured products

Early-to-mid 2025

Saifr, Atlantic Council

White House / Executive Branch

Revocation of previous executive orders (e.g., EO 14067) and Treasury frameworks; establishment of the President’s Working Group on Digital Asset Markets; definition updates for blockchain technologies; prohibition on US CBDC development

Blockchain (smart contracts, distributed ledgers), emerging AI advisory roles

Creation of a technology-neutral regulatory framework that supports innovation in structured finance; clear guidelines fostering blockchain-enabled securitization and contract automation

Immediate effect; reforms effective from early 2025

White House EO

CFTC

Launch of public roundtables and dedicated task forces on digital asset derivatives and event contract marketplaces; coordination with the SEC to review existing crypto and digital asset guidelines; further integration of AI for market oversight and fraud monitoring

AI for market risk monitoring, blockchain for digital asset derivatives

Modernization of derivative frameworks impacting crypto- and blockchain-based structured products; improved supervisory and enforcement models based on AI analytics

Mid-to-late 2025

Morgan Lewis

Congress / Legislative Initiatives

Introduction of stablecoin and digital asset legislative proposals (e.g., Clarity for Payment Stablecoins Act, Lummis-Gillibrand Payment Stablecoins Act); bipartisan working groups to create unified digital asset regulatory frameworks building on FIT21

Blockchain as underpinning for stablecoins and digital securities; indirect role for AI in compliance solutions

Legislative clarity to enable new structured finance instruments integrating digital assets, blockchain, and potentially AI-driven credit risk assessments; enhanced market liquidity and investor protection

Proposed within the next 100 days to mid-2025

Morgan Lewis

Regulatory Body

AI-Specific Changes

Impact on Financial Processes

Relevance to Structured Finance

SEC

Adoption of AI-powered robo-advisors and automated inspection processes; potential issuance of staff letters and no-action relief for tech-driven financial products

Streamlined underwriting, risk assessment, and compliance processes; improved data analytics for investor protection

Greater integration of AI in structured finance due diligence and product design

CFTC

Deployment of generative AI for fraud simulation, stress testing, and risk management in derivatives markets

Enhanced oversight of complex derivative instruments and market surveillance

Modernization of structured finance derivatives based on blockchain digital assets

White House

Coordination across agencies for AI governance frameworks in fintech; directives from the President’s Working Group on Digital Asset Markets (chaired by a Special Advisor for AI and Crypto)

Harmonized regulatory approach across financial technology and digital asset markets

Supports consistent application of AI in structured finance and digital capital markets

Innovation

Impact on Market Growth

Impact on Transparency

Impact on Efficiency and Cost Reduction

Source Citation

Digital Automation & Data Analytics

Streamlines issuance and standardized structuring, enabling higher volumes and scale expansion in ABS and CLO markets.

Real-time data processing and automated reporting improve investor visibility and disclosure of asset performance.

Automation reduces manual intervention, lowers errors, and cuts administrative costs.

IQEQ

Enhanced Data Security & Governance

Supports new asset classes (e.g., renewable and digital assets) by promoting innovation and instilling confidence in market participants.

Improved data accuracy ensures high-quality, consistent information making risk assessments more transparent.

Secure, robust systems accelerate decision making and mitigate operational risks.

IQEQ

Digital Trading Platforms & CLO ETFs

Breaks down barriers between institutional and retail segments; drives broader market participation and liquidity expansion.

Digital platforms offer continuous pricing transparency and easier performance tracking.

Reduces transaction frictions and enhances trade execution speed, leading to cost efficiencies.

Deutsche Bank

Year

AUM (US$ billion)

Growth Insight

Source Citation

2023

2.25

Baseline prior to recent digital adoption.

Deutsche Bank

End 2024

20

Nearly 10-fold increase attributed to digital innovations in trading platforms.

Deutsche Bank

Area

Description

Related Innovation

Source Citation

Market Growth

Digital innovations boost issuance volumes and attract a broader investor base by simplifying structured transactions.

Digital automation; Digital trading platforms

IQEQ, Deutsche Bank

Transparency

Enhanced data security and digital reporting afford investors clear insight into asset performance and risk metrics.

Data analytics; Transparent digital platforms

IQEQ

Efficiency

Automation and advanced digital platforms lower operational costs, increase speed of execution, and reduce errors.

Automated processes; Digital trade and settlement mechanisms

IQEQ, Deutsche Bank

Technology/Innovation

Disruptive Element

Impact on Structured Finance

Reference

Blockchain & Tokenization

Digital issuance of blockchain-based security tokens representing real-world assets

Enhances liquidity, fractionalizes assets, reduces transaction costs, and increases market access

IQEQ

Artificial Intelligence & ML

Advanced data analytics, automated decision-making, and enhanced risk management

Improves credit risk evaluation, automates loan servicing, and streamlines underwriting and compliance processes

Kadence

Green Securitization Innovations

Integration of sustainability and ESG criteria within securitized assets

Lowers cost of capital, attracts sustainable investors, and supports financing for renewable energy and decarbonization projects

Deloitte

Decentralized Finance (DeFi)

Peer-to-peer financial services powered by blockchain technology

Reduces reliance on traditional intermediaries, speeds up transaction processing, and broadens investor participation

Kadence

Non-Traditional Asset Classes

Inclusion of assets such as renewable energy projects, digital assets, and infrastructure into securitization pools

Diversifies asset bases, unlocks new pools of liquidity, and leverages emerging market segments in structured finance

IQEQ

Category

Key Factors

Strengths

• High institutional demand as evidenced by expanding CLO issuance and increased participation from funds and ETFs (e.g., S&P Global report indicates stability and expansion in issuance volumes S&P Global Ratings).• Advanced risk analytics and credit rating methodologies supporting stable rating trends and improved risk management (Moody’s and S&P Global comment on resilient performance under dynamic stress conditions).

Weaknesses

• Sensitivity to macroeconomic shifts such as inflation and interest rate fluctuations, potentially impacting refinancing conditions, as noted in sector-specific reports (S&P Global Ratings).• Exposure to sub-sector risks (e.g., retail-oriented portfolios and transportation leasing vulnerabilities).

Opportunities

• Growth in public infrastructure financing including data centers, cell towers, and clean energy-related securitizations, as the structured finance market targets new asset classes (SIFMA Capital Markets Outlook).• Increasing digitization and AI-driven analytics improvements further enhancing risk assessment and deal structuring.

Threats

• Re-emergence of inflation and potential economic downturns may disrupt asset performance and lead to higher default risks.• Geopolitical tensions and evolving regulatory landscapes can introduce uncertainties for market participants (as noted in various market outlooks including Moody’s and other structured finance analyses).

Metric/Factor

Data Point/Insight

Source Citation

Institutional Demand

Expanding CLO issuance and higher participation from ETFs indicate robust institutional backing.

S&P Global Ratings

Advanced Risk Analytics

Deployment of sophisticated risk models and stable credit rating trends help maintain sector resilience.

Moody’s Insights

Market Sensitivity

Economic headwinds such as inflation and interest rate changes noted as significant risks.

S&P Global Ratings

Infrastructure and Digital Expansion

Increased securitization opportunities in data centers, fiber, and cell towers driven by public infrastructure needs.

SIFMA Capital Markets Outlook

Weakness Category

Description

Impact on Market

Data/Notes & Citation

Exposure to Credit Volatility

Structured finance products rely on underlying asset performance. Weakening household credit quality may lead to rising delinquencies and defaults.

Increased credit losses, unpredictable cash flows, and potential rating downgrades.

S&P Global Ratings report notes that performance of securitizations is affected by household financial strength S&P Global

Sensitivity to Interest Rate Shifts

Mortgage- and asset-backed securities have inherent prepayment and extension risks. They are highly sensitive to interest rate fluctuations, which can alter expected maturities and cash flows.

Reduced returns, heightened reinvestment risk, refinancing challenges, and valuation uncertainty.

Janus Henderson highlights that these securities are more vulnerable to interest rate changes due to extension and prepayment risks Janus Henderson

Structural Leverage and Debt Concentration

In some structures, high leverage within the capital stack adds to the exposure if the underlying assets underperform.

Amplified losses in adverse conditions, potential refinancing difficulties, and stressed balance sheet positions.

Market observations indicate that top-heavy debt structures can worsen recovery rates for first-lien debt Moody's

Valuation and Liquidity Risks

Securitized products often exhibit greater valuation uncertainty and lower liquidity relative to other fixed income instruments, particularly during stressed market periods.

Reduced market confidence, wider bid-ask spreads, and increased volatility during market dislocations.

These risks compound when credit quality deteriorates, as noted by multiple sources including industry research Janus Henderson

Financial Metric

Value/Range

Context & Citation

Agency Mortgage Prepayment Risk

High sensitivity noted

Risk increases with falling interest rates; can lead to reduced yield on mortgage-backed securities Janus Henderson

Structured Finance Delinquency/Default Rates

Expected to rise in volatile credit environments

Vulnerability linked to deteriorating household finances impacting asset-backed securities S&P Global

Opportunity Segment

Key Characteristics

Emerging Trends & Drivers

Financial Data/Projections

Green Securitization

Utility-related securitization financing clean energy projects.

Growth driven by utilities’ investments in clean energy, infrastructure modernization, and climate resiliency S&P Global Ratings.

Historically stable performance; robust issuance expected as utilities recover costs from climate events.

Non-traditional Assets

ABS structures built on emerging sectors such as data centers, renewable energy (e.g., solar), ground leases, and alternative credit markets.

Increased use of securitizations for data center financing and structured equity options; new financing approaches are being adopted as rating agency familiarity grows Freshfields.

ABS issuance has reached record levels ($340B projected ABS issuance in 2025 AAM Company).

CLO & Structured Credit

Broad array of instruments aiming at diversified exposure through CLO, CMBS, and RMBS.

Expansion into ETFs, growing private credit involvement, and optimization of structures amid a steep yield curve environment KBRA; interest in non-traditional securitizations supports yield and risk management.

Issuance remains strong (e.g., CLO issuance near $180B as per market expectations AAM Company).

Factor

Description

Impact on Growth

Regulatory Environment

Potential rollback of regulatory restrictions and capital requirement reforms.

Could spur market activity and attract non-traditional financing structures Freshfields.

Economic Incentives

Lower interest rates and high yield demands in a competitive market.

Drives investor interest in higher risk-adjusted return structured products, including green and non-traditional assets Moody's.

Technological Advancements

Enhanced risk analytics tools and structuring methodologies.

Increases efficiency in underwriting complex non-traditional assets, facilitating growth in niche securitizations.

Market Dynamics & Investor Demand

Diversification benefits and resiliency in periods of volatility.

Attracts insurance and pension capital into structured finance sectors, broadening investor base.

Opportunity Type

Description

Key Trends

Utility-Related Securitization

Financing for clean energy and disaster recovery projects funded by utilities.

Improved recovery metrics and steady issuance volumes bolster market stability and growth potential S&P Global Ratings.

Data Center & Digital Asset ABS

ABS solutions for data center portfolios and digital infrastructure assets.

Mature market in the US with increasing penetration by smaller players and supportive project financing solutions Freshfields.

Structured Equity for Non-Traditional Assets

Financing equity portions via structured equity (e.g., preferred shares) in non-traditional sectors.

Rising interest from sponsors and operating companies in leveraging alternative financing models to support growth and mitigate risk allocation issues.

Factor

Description

Impact

Source

Enhanced Compliance Burden

Increased regulatory mandates and oversight on structured finance and embedded finance arrangements raise compliance costs.

May reduce issuance volumes and slow down market activity due to higher operational costs.

Corporate Compliance Insights

Heightened Oversight

Regulatory bodies intensifying their scrutiny of third-party relationships and transaction structures (e.g., oversight for fintech partnerships).

Potential delays in processing transactions and tougher refinancing conditions for upcoming ARDs.

FINRA Annual Regulatory Oversight Report

Evolving Regulatory Policies

Uncertainty stemming from potential policy shifts and new regulatory proposals, such as data-sharing requirements mandated by regulators.

Increased uncertainty can cause market participants to adopt a more cautious approach and hinder innovation.

Corporate Compliance Insights

Factor

Description

Impact

Source

Slowing Economic Growth

Macro-economic weakness combined with trade and tariff uncertainties (e.g., potential higher tariffs on imports) destabilize market fundamentals.

May lead to lower demand for structured finance products, rising defaults, and refinancing challenges in sectors like container leasing.

S&P Global Ratings

Inflation and Consumer Financial Strain

Persistent inflation uncertainty and eroding consumer savings strain the performance of asset-backed securities tied to household financial strength.

Could result in higher delinquency rates and default risks, negatively affecting the performance of existing securitizations.

Moody's Insights

Interest Rate Environment

Elevated interest rates and potential rate hikes impact refinancing conditions for structured finance instruments.

Tougher refinancing conditions and widening cap rates can limit market growth and credit performance stability.

S&P Global Ratings

Indicator

Data/Value

Notes/Source

Issuance Volumes

2024: ~ $325 billion2025 Forecast: ~ $345 billion

New issue volumes increased ~30% YoY in 2024 with a forecasted 6% growth into 2025 (KBRA).

Growth Rates

Moderation from ~30% YoY (2024) to ~6% (2025)

A strong surge in 2024 followed by moderate expansion expected in 2025 (KBRA).

Default Rates

Stability overall; some stress in non-prime segments

ABS ratings remained highly stable (~97.9% stability ratio) in 2024 – though weaker performance was noted in lower credit segments (KBRA).

Revenue

Data not available

Detailed revenue figures for ABS issuers were not provided in the available sources.

Profit Margins

Data not available

Detailed profit margin data for ABS transactions is not available.

Indicator

Data/Value

Notes/Source

Issuance Volumes

Middle-market CLO issuance more than doubled (H1 2022)

The robust CLO market is driven by a growing leveraged loan pipeline; specific volume figures for 2025 are not clearly detailed (SFA Research Corner).

Growth Rates

Outlook remains robust

Market expectations point to continued demand for CLOs; however, quantitative growth percentages are not provided.

Default Rates

Expected to decline

U.S. and European CLO collateral defaults are forecast to decline in 2025, underpinned by stronger refinancing activity (Moody’s; Goldman Sachs Asset Management).

Revenue

Data not available

No specific revenue figures are provided in the reviewed documents.

Profit Margins

Data not available

Profit margin information for CLOs is not available from the current sources.

Financial Indicator

ABS

CLOs

Issuance Volumes

~$325B (2024) & ~$345B (2025 forecast)

Robust, with H1 data showing a more than doubling in middle-market issuance (SFA Research Corner)

Growth Rates

~30% YoY surge (2024); ~6% predicted (2025)

Outlook remains favorable; specific rate details not provided

Default Rates

Stable overall; slight stress in non-prime segments

Expected to decline as refinancing activities support credit quality (Moody’s)

Revenue

Not available

Not available

Profit Margins

Not available

Not available

Metric

2019 / Early Trend

2020 – 2021

2022

2023 – 2024

Default Rates

Base-case assumptions

Emerging acceleration; defaults in solar ABS noticed in some segments S&P Global, Nov 2024

Further acceleration observed, especially in segments with concentrated exposures

Higher than historical assumptions; default rates exceeded some stress scenarios S&P Global, Nov 2024

Prepayment Speeds

Forecasted ranges applied (3%-20%)

Actual prepayments near or below lower limits; slower prepayment speeds noted S&P Global, Nov 2024

Continued observation of delayed prepayments affecting cash flow timing

Persistently slower-than-expected prepayment speeds impacting credit enhancement

Rating Adjustments

Stable ratings reflecting healthy performance

Signs of performance deterioration in select securitizations; gradual rating changes

Increased rating stress in certain pools with asset concentration

Frequent rating reviews to align with evolving credit conditions S&P Global, Mar 2024

Issuance & Market Activity

Relatively robust issuance in structured segments

Issuance maintained despite market disruptions; active management rising

Continued issuance, though with tighter credit profiles and more rigorous underwriting standards

Market performance exhibiting volatility with heightened risk factors reflected in trading and issuance volumes

Risk Factor

Observations Over the Past 5 Years

Credit Concentration

Pools with a concentrated exposure, especially where effective number is small, have been more volatile Moody’s Ratings, Dec 2023

Cash Flow Volatility

Slower prepayment speeds increase the risk of payment shocks and affect credit enhancement mechanisms

Counterparty and Underwriting Risk

Changing underwriting standards and credit approval processes have tightened as market conditions evolved

Evolving Market Conditions

Increased market volatility, influenced by evolving interest rate environments and macroeconomic shifts, have impacted performance relative to historical baselines

Factor

Recent Trend

Likely Impact on Structured Finance Market

Inflation

Projected long-term trend near 2.4%-2.6% (Trading Economics)

Moderated inflation reduces cost pressures and may stabilize cash flows, though residual uncertainty continues to affect refinancing and borrower performance.

Federal Reserve Policy

Rates remain high (target range 5.25%-5.50%) with gradual normalization. Fed is expected to exercise patience until sustained trend toward 2% is evident (Forbes Advisor)

Sustained high rates may impede rapid refinancing; however, potential tapering and eventual rate cuts could improve market liquidity and asset refinancing conditions.

Market Dynamics

Robust issuance activity across ABS, MBS, CLOs and stable rating trends (S&P Global Ratings, AAM Company)

Strong demand for structured products will continue. Stable rating trends and solid underlying cash flows support long-term performance, but specific sectors (e.g., retail-focused CMBS) may face localized pressures.

Asset Class

Expected Performance / Key Trends

Impact of Economic Factors

Agency MBS

Issuance expected to remain robust; bank participation likely increases (AAM Company)

Higher rates and tight mortgage spreads may lead to narrower coupon spreads if refinancing conditions improve with eventual rate normalization.

Asset-Backed Securities (ABS)

Record issuance volumes with projections around $340 billion; attractive yields due to marginal spread tightening of 5-10bps (AAM Company)

Moderated inflation and stable credit quality support performance, though sectors sensitive to consumer balance sheets may remain vulnerable.

Collateralized Loan Obligations (CLOs)

Continued yield advantage despite variable rate challenges; possible competitive pressure from rate cuts enhancing fixed alternatives (AAM Company)

The outlook depends on how rate cuts unfold; fewer cuts or a steeper yield curve could preserve the attractiveness of CLOs.

Commercial Mortgage-Backed Securities (CMBS)

Some segments generating high excess returns; retail and office portfolios continue to be cautious due to tenant defaults and vacancies (S&P Global Ratings)

Persistent high rates and subdued market activity may negatively affect assets with mark-to-market risk, while long-term lease contracts provide a cushion.

Parameter

Forecast/Expectation

Overall Market Trend

Stable to moderately positive performance driven by robust issuance and stable ratings.

Credit Quality

Expected to remain stable; some sectors (e.g., retail-oriented CMBS) may experience stress due to weaker consumer balance sheets.

Refinancing Conditions

Likely improvement if Fed eventually provides more accommodative measures after inflation trends settle.

Investor Demand

High, driven by attractive yields and the diversification benefits of structured finance assets.

Risk Factor

Description

Data/Source & Implications

Credit Volatility

Exposure to fluctuating credit quality stemming from household financial weakness, delinquencies, and defaults.

Ratings from structured finance reports indicate that performance of existing securitizations is affected by consumer balance sheets and interest rate environment (S&P Global Ratings).

Regulatory Challenges

Evolving compliance requirements including new disclosure rules, Basel III Endgame mandates, and heightened supervisory scrutiny.

Regulatory outlooks published by Deloitte stress intensified oversight and expanded regulatory perimeters with attention to areas such as liquidity, capital planning, and operational risk management (Deloitte Banking Regulatory Outlook 2024; Deloitte Regulatory Outlook 2025).

Interest Rate Sensitivity

Increased market volatility due to changing interest rates impacting refinancing conditions and asset valuations.

S&P Global analysis notes that note structures and refinancing conditions may become tougher if higher interest rates persist (S&P Global Ratings).

Risk Factor

Mitigation Strategy

Description & Data-Backed Approaches

Source /

Credit Volatility

Robust Stress Testing & Scenario Analysis

Implement rigorous stress tests using historical default rates and consumer credit metrics. Incorporate overcollateralization techniques (e.g., faster amortization of principal) to cushion credit volatility, as data indicates such structures help maintain rating stability.

S&P Global Ratings

Regulatory Challenges

Proactive Regulatory Governance & Capital Planning

Enhance internal governance by monitoring evolving regulatory frameworks (Basel III, SEC disclosure rules, etc.). Invest in compliance infrastructure to ensure timely remediation and adherence; data from Deloitte underscores the need for dynamic responses to new regulatory obligations.

Deloitte Regulatory Outlook 2025

Interest Rate Sensitivity

Dynamic Asset-Liability Management

Utilize scenario-based analysis to assess impact of rate hikes, and adjust maturity profiles across assets to mitigate refinancing risks. Data indicate that tighter refinancing conditions require proactive adjustments in portfolio composition.

S&P Global Ratings

Data Point

Value/Observation

Implication

Overcollateralization in Transaction Structures

Amortization of note principal faster than underlying assets

Helps stabilize ratings amid credit quality fluctuations

Increase in Regulatory Scrutiny

Expanded oversight across institutions

Necessitates improved risk management and governance frameworks

Rising Interest Rates

Potential for tougher refinancing conditions

Demands dynamic asset-liability and capital planning strategies

Metric/Trend

ABS Insights

CLO Insights

Source(s)

Issuance Volume

ABS volumes rising; 2024 record levels with forecasts of 6% YoY increase in 2025

Issuance expected to remain at approx. $180 billion

KBRA ABS Outlook, S&P Global

Credit and Risk Profiles

Overall stability but potential stress in non-prime segments and consumer loan areas

Strong yield advantage; variable rate structure; narrowing spreads with investor backing

SIFMA ABS Statistics, AAM Structured Products Outlook

Investor Appetite and Diversification

Increasing focus on quality underwriting, enhanced disclosures, and transparency

Growing interest from banks, insurers, and retail investors through ETFs; diversification of credit stacks

AAM Outlook, Moody’s

Recommendation Area

Strategic Action

Rationale/Supporting Data

Source(s)

1. Targeted Underwriting

Enhance underwriting standards and focus on high-quality assets

With parts of the consumer ABS, especially in non-prime segments, showing stress, tightening underwriting and enhanced credit enhancements can reduce defaults.

KBRA ABS Outlook, FDIC

2. Enhanced Transparency

Implement comprehensive disclosure frameworks for underlying assets

Improved disclosure on asset composition, cash flows, and trigger events will build investor confidence and mitigate panic in adverse events.

FDIC, S&P Global PDF

3. Diversification of Asset Pools

Broaden asset pools and structure deals to include resilient sectors

Including utility-related securitizations and transportation segments, along with diversified collateral, can reduce overall portfolio risk.

S&P Global, Moody’s Structured Finance Outlook

4. Risk Management and Tech Integration

Invest in advanced analytics and risk management tools

Utilizing automated data analytics and enhanced modeling ensures timely identification of credit deterioration and interest rate risks.

Janus Henderson Insights, FDIC

5. CLO Structuring and Investor Diversification

Leverage flexible, variable-rate structures; target non-traditional investors (ETFs, retail)

The yield advantage of CLOs under a variable rate structure and narrowing spreads positions them as attractive short-duration options. Broadening investor base can drive liquidity.

AAM Structured Products Outlook, Moody’s

6. Regulatory Alignment

Engage with regulators for streamlined processes and risk retention thresholds

Proactive engagement helps ensure structured products are designed within evolving regulatory parameters, which is crucial as economic conditions change.

White & Case LLP, FDIC

7. Market Innovation and Partnerships

Explore public-private partnerships and innovative financing structures

Partnerships with banks, insurance companies, and tech providers can supply needed capital and enable bundling of credit enhancement and diversification strategies.

SIFMA Capital Markets Outlook, Moody’s

Focus Area

Key Initiative

Expected Benefit

Metric/Financial Indicator

Underwriting & Credit Quality

Tighten standards, enhance credit enhancements

Lower default rates; stability in ABS ratings

ABS rating stability ratio ~97.9% (KBRA)

Transparency & Disclosure

Implement detailed asset-level reporting and trigger info

Increased investor confidence; mitigated panic

Reduction in rating downgrades in stressed segments

Diversification

Broaden asset types; include resilient sectors

Risk reduction; enhanced portfolio robustness

Projected 6% YoY increase in issuance volumes

Technology & Risk Management

Deploy advanced analytics and automated platforms

Proactive risk identification; lower volatility

Improved loss forecasting and tranche performance

CLO Structuring & Investment

Leverage variable rate and diversified investor pool

Attractive yields; robust returns in challenging rate environments

Stable returns despite rate cuts; expanded investor base

Regulatory & Partnership

Collaborate with regulators; explore public-private partnerships

Streamlined processes; capital market expansion

Favorable regulatory environment & increased deal flow

Opportunity Area

Description

Driving Factors

Expert Insights & Citations

Green Securitization

Securitized assets linked to renewable energy, clean infrastructure, and climate resilience.

Increased ESG disclosures, favorable regulatory shifts, and lower cost of capital make sustainable issues attractive.

Sustainability disclosures are attracting a larger investor base while lowering financing costs (IQEQ, S&P Global Ratings).

Non-Traditional Assets

Inclusion of assets beyond the conventional mortgage or loan portfolios such as digital assets, tokenized securities, and infrastructure projects.

Advancements in fintech, blockchain tokenization, and enhanced data-driven risk management encouraging diversification.

Innovations such as blockchain-driven tokenization are unlocking new liquidity pools, expanding the asset base available for securitization (IQEQ).

Evolving Investor Preferences

Shifting demand toward transparent, ESG-aligned, and tech-enabled investment solutions in structured finance.

Heightened focus on sustainable investing, demand for greater transparency, and preference for resilience even with complex assets.

Investors are increasingly favoring products that combine sustainable characteristics with efficient technology and transparency, which is reshaping product design in structured finance (IQEQ, S&P Global Ratings).

Trend Category

Key Driver(s)

Indicator/Technology

Supporting Source(s)

Green Securitization

ESG disclosure; regulatory support

Clean energy financing; utility-related securitization initiatives

Market insights indicate that sustainability efforts lower capital costs and expand investor pools (IQEQ, S&P Global Ratings).

Adoption of Non-Traditional Assets

Fintech innovation; blockchain integration

Digital asset tokenization; fintech-enabled risk management

Technology-driven transformation is expanding the securitization landscape to include non-traditional assets (IQEQ).

Evolving Investor Preferences

Demand for transparency and sustainable investments

Enhanced reporting standards; ESG integration

Investor appetite is shifting towards products offering clear ESG credentials and advanced risk assessment, driving structured finance evolution (IQEQ, S&P Global Ratings).