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Don’t Be A Subprime “Hero”: Wall Street Wants You To Know This Ain’t A Movie
14 months ago (almost to the day), Citi's Mary Kane had some advice for clients.
See, some folks were starting to get the idea that maybe securitizing auto loans made to borrowers with no FICOs was a really bad idea - those borrowers having no credit score and all.
For those unaware that such things have been going on for years in the US auto market, here's a look at a deal that got done in 2015 (the originator shall remain nameless but you can find it if you really want to):
Here's what t
I’m of the opinion that they are right. While there is a bit of a bubble here, it’s not like people are buying 2 or 3 cars just because they can and are wagering on the value of those cars going up.
Sure there will be losses, and those losses might surprise some of holders of low rated slices, but overall this isn’t going to be anything close to the housing bubble. Cars wear out much faster, and so the market can more easily adjust to over supply by reducing production of new cars.
So how would you trade on this belief? Is it easy to buy CDS for ABS? (Don’t intend to, not looking for trading advice, etc.)