auto debt

This Chart Shows “The Clouds Darkening For US Autos”…

"...nearly double the average differential by this time last year."

It’s Thursday afternoon and this week that means it’s actually Friday afternoon.

And if it’s de facto Friday afternoon, that means people have officially stopped thinking for the week and that removal of “thinking caps” will be invariably reflected in a propensity to avoid any and all posts longer than about 200 words (give or take).

So, in the interest of saying something without saying much (that’s sometimes a tall order), I dug around and found a fun chart for readers.

The following encapsulates the trouble we’ve been talking about in auto land over the last two weeks (anyone interested in the full story, start here). So this may not look like a big deal, but make no mistake: it is notable. This is cash spreads on US auto parts bonds versus IG cash bonds as a whole:


As you can see, that’s a pretty dramatic run-up in a really, really short period of time. Here’s Goldman

Clouds darken for Autos…

The spread differential between the IG Auto sector and the broader iBoxx IG index has widened to 24bp (165bp vs. 141bp, respectively), with spreads on Autos revisiting their late January 2017 levels when GM was upgraded and nearly double the average differential by this time last year (Exhibit 2)

Remember, the auto loan market is ~$1.2 trillion in America. You don’t want to see these types of “cracks” developing…


2 comments on “This Chart Shows “The Clouds Darkening For US Autos”…

  1. mldigruttolo

    Yep! You know it’s really bad when even John Oliver has warned people about this (great episode on this very thing last year) you think we have another six months before the subprime auto loans come crashing down?

  2. Curt Tyner

    Just one more domino set to fall with another and another and another and another and another lined up needing one event (many to choose from in this debt riddled world), and “boom daddy”over we go.

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