Auto ABS spreads show ‘marginal’ widening throughout the first month of the Iran war

Auto asset-backed securities spreads have widened in the month since the start of the Iran war, with reports this month that the U.S. and Iran are in talks to possibly end the war adding to uncertainty in the market. Spreads on AAA-rated three-year prime notes, for example, were flat week over week at 40 basis points (bps) over Treasuries as of March 26, but were four bps wider compared with Feb. 26, according to JPMorgan Securities data. The Iran war started Feb. 28. [caption id="attachment_58360209" align="aligncenter" width="616"] Source: JPMorgan Securities[/caption] Despite spreads widening, investor sentiment remains strong. “ Investors continue to have money to put to work , and prime auto senior tranches are a safe haven where investors have confidence in both the asset class and the issuers,” Brock Wolf , head of the securitized products group at Truist Securities , told Auto Finance News . Similarly, spreads in investment grade subprime notes also widened for the first month, since the start of the war. For example, A-rated three-year notes widened 12 bps MoM but remained flat week over week at 95 bps over Treasuries, according to JPMorgan Securities data. [caption id="attachment_58360208" align="aligncenter" width="478"] Source: JPMorgan Securities[/caption] While prime auto spreads have held steady since the conflict began, some asset classes and bonds have widened more than others, Wolf said. “More esoteric/niche asset classes have widened more than flow asset classes, and subordinated bonds have widened more than seniors,” he said. ‘Steady demand’ Though auto ABS spreads have widened marginally from low levels in February, they remain below their October 2025 peak, Rod Chadehumbe , chief ABS strategist at Bloomberg Intelligence , told AFN . “We’ve seen steady demand in ABS since the beginning of the Iran war, and that was driven by the fact that interest rates moved up and market participants repriced inflation going higher,” he said. “We don't expect any substantial widening or tightening; spreads are going to remain pretty much in a tight range around these levels.” “We don't expect any substantial widening or tightening; spreads are going to remain pretty much in a tight range around these levels.” -- Rod Chadehumbe, chief ABS strategist, Bloomberg Intelligence The ABS market and investor sentiment, at large, is resilient with the exception of the weeks following the onset of the Iran war , Amitay Kalmar , co-founder and Chief Executive at Lendbuzz , told AFN, noting that adjustments the market makes can result in stabilization. “Definitely, the war in Iran impacted both rates as well as spreads ... if the markets adjust, then you can see stabilization, even if some of those things are playing out for a little while,” he said. Lendbuzz is an active issuer in the auto ABS market and on Jan. 21 came to market with a subprime $246.1 million auto ABS deal, according to CreditFlow , which monitors securities. The lender is also looking to expand its forward-flow program in 2026 with up to two new deals, Kalmar said. "We're extending and upsizing the current forward flow partners, and then we'll add one or two additional partners this year,” he said. “We have strong commitments from partners both on the ABS side as well as the forward-flow side" Fundamentals and structure of ABS deals, such as performance and underlying collateral should hold up, Bloomberg Intelligence’s Chadehumbe said. “Given the loss levels that we've seen in the space, [ABS markets] should be able to withstand any marginal increases in losses going forward,” he said. Auto Finance News will present multiple invaluable events for industry professionals in 2026, starting with Auto Finance Summit East and Auto Finance Capital Summit in May. To see event agendas and register, visit autofinance.live .

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Auto ABS spreads show ‘marginal’ widening throughout the first month of the Iran war

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