Asset Backed Securities Market Size - By Issuer Types (Financial institutions, Captive finance companies, Specialty finance companies, Government-Sponsored Enterprises (GSEs)), Underlying Asset, Maturity, Structure, Issuance Type & Forecast, 2024 - 2032

Asset Backed Securities Market Size

Asset Backed Securities Market size was valued at USD 1.2 trillion in 2023 and is estimated to register a CAGR of over 8% between 2024 and 2032. The rise in current-dollar Personal Consumption Expenditures (PCE) is driving the market by increasing the volume of consumer debt such as auto loans, credit card receivables, and mortgages.
 

According to the Bureau of Economic Analysis, in 2023, the USD 160.9 billion rise in current-dollar PCE in March was due to an USD 80.6 billion increase in spending on services and an USD 80.3 billion increase in spending on goods. Financial institutions have more loans to securitize due to higher consumer spending, enhancing the supply of asset-backed securities. This higher securitization activity meets investor demand for diversified, high-yield investment options, thereby driving the expansion and liquidity of the asset-backed securities industry.
 

The rising global economy fosters lucrative growth opportunities for the asset backing securities market by boosting consumer and business borrowing. The increasing economic activities lead to higher volumes of loans and receivables available for securitization, enhancing the supply of asset-backed securities and attracting investors seeking diversified, high-yield investments. Additionally, global financial integration and cross-border investments further stimulate demand, driving the market growth.
 

Regulatory uncertainties pose a significant challenge to the asset backing securities industry growth. Changing regulations aimed at enhancing transparency, mitigating risks, and protecting investors can increase compliance costs and potentially limit the issuance of certain types of asset-backed securities. Inconsistencies or lack of clarity in regulatory frameworks across different jurisdictions can also create uncertainties for market participants operating globally. Addressing these regulatory challenges through clear guidelines, harmonization of rules, and ongoing dialogue between regulators and industry stakeholders is crucial for fostering a conducive environment for market demand.
 

Asset Backed Securities Market Trends

The rising issuance of green and sustainable ABS is driving the asset backing securities industry by attracting environmentally conscious investors and fulfilling Environmental, Social, Governance (ESG) mandates. For instance, in December 2021, Flexential, a prominent provider of data center colocation and cloud connectivity services, completed the largest single asset-backed securities issuance in the data center industry, which included a large green data center with asset-backed securities financing feature. The company issued these green notes under its new Green Finance Framework, setting a new standard for green eligibility in the data center sector.
 

Growth in non-traditional asset classes is propelling the asset-backed securities industry by diversifying the types of assets available for securitization such as fintech loans, royalties, and renewable energy projects. This expansion attracts a broader range of investors seeking varied and high-yield investment opportunities. Additionally, it encourages financial innovation and enhances market resilience by reducing dependency on traditional asset classes. The increasing acceptance of new asset classes will drive overall growth and liquidity in the market.
 

Asset Backed Securities Market Analysis

Based on underlying asset, the market is divided into Residential Mortgage-Backed Securities (RMBS), Commercial Mortgage-Backed Securities (CMBS), auto loan/lease ABS, credit card ABS, student loan ABS, and equipment lease ABS. The RMBS segment is poised to exceed USD 700 billion by 2032. The increasing amount of outstanding household mortgage debt is driving the asset backing securities market growth. This trend provides a larger pool of mortgage loans available for securitization, thereby expanding the supply of Mortgage-Backed Securities (MBS) within the market.
 

According to the Urban Institute, Housing Finance Chartbook, in the third quarter of 2023, households' outstanding mortgage debt increased by 0.6% during the quarter, reaching a total of USD 12.9 trillion. Investors are attracted to these securities due to their stable cash flows, contributing to the overall growth and liquidity of the market.
 

Based on issuer types, the asset backed securities market is categorized into financial institutions, captive finance companies, specialty finance companies, and Government-Sponsored Enterprises (GSEs). The financial institutions segment held a major market share of around 37% in 2023. Financial institutions benefit from access to capital, leveraging their large depositor bases and borrowing capabilities to originate and package diverse assets for securitization.
 

Additionally, they possess specialized expertise and established infrastructure in structuring, underwriting, and servicing asset-backed securities, ensuring efficient issuance processes. This expertise encompasses risk assessment, legal compliance, and investor relations, enabling smooth navigation of complex asset-backing securities markets. Together, these factors empower financial institutions to play a pivotal role as issuers in the market, driving its growth and facilitating liquidity.
 

North America dominated the global asset backed securities market with a share of over 27% in 2023. The increasing demand for various forms of consumer credit, such as auto loans, credit card receivables, and student loans, has provided a steady supply of underlying assets for securitization. Consumer lending activities continue to grow, driven by factors, such as population growth and economic expansion, providing a consistent pipeline of assets that can be packaged into asset-backed securities for investors.
 

Robust economic expansion across key Asia Pacific economies, coupled with burgeoning consumer markets, has catalyzed demand for credit facilities. This surge in consumer lending has generated a substantial pool of securitizable assets, including auto loans, credit card receivables, and residential mortgages, driving issuance volumes in the region's asset-backed securities market.
 

Increased issuance and innovation in the Europe ABS market are driven by a broader array of securitized assets and creative financial structures. New asset classes, such as renewable energy project receivables and fintech-originated loans, are being securitized. This expansion diversifies the market and attracts various investors. Additionally, innovative structures, including synthetic securitizations and hybrid models, enhance flexibility and investment opportunities. These developments contribute to a dynamic market environment, fostering growth and investor interest.
 

Asset Backed Securities Market Share

JPMorgan Chase and Bank of America Merrill Lynch hold a significant market share of over 21% in the asset backed securities industry. American Express actively securitizes its credit card receivables through its Lending Trust platform. Its strategy involves regularly issuing asset-backed securities to monetize its credit card loan portfolio, transfer risks, and free up capital for further lending activities.
 

JPMorgan Chase is a major player in the asset-backed securities industry, acting as both an issuer and underwriter. Its strategy involves securitizing various asset classes, including credit card receivables, auto loans, and residential mortgages, to manage risks and generate fee income from underwriting activities.
 

Asset Backed Securities Market Companies

Major companies operating in the asset backed securities industry are:

• Bank of America Merrill Lynch
• Barclays
• Citigroup
• Credit Suisse
• Deutsche Bank
• Goldman Sachs
• JPMorgan Chase
• Morgan Stanley
• Toyota Motor Credit Corporation
• Wells Fargo
   

Asset Backed Securities Industry News

• In May 2024, CyrusOne, a prominent developer and operator of global data centers known for providing cutting-edge digital infrastructure solutions, concluded its USD 1.175 billion asset-backed securities offering. The offering comprises tranches with durations of five and seven years, and the notes are designated as Secured Green Collateral Bonds.
   
• In May 2024, Enova International's subsidiary, OnDeck Asset Securitization IV, LLC, plans to offer USD 399.5 million in asset-backed fixed-rate notes. These notes are expected to receive a rating from the Kroll Bond Rating Agency and have a final payment date of June 17, 2031. The proceeds from the offering will finance the acquisition of small business loans, which will serve as collateral. This private offering is aimed at qualified institutional buyers and non-U.S. persons, complying with relevant securities regulations.
   

The asset backed securities market research report includes in-depth coverage of the industry, with estimates & forecast in terms of revenue (USD Billion) from 2021 to 2032, for the following segments:

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Market, By Underlying Asset

• Residential Mortgage-Backed Securities (RMBS)
• Commercial Mortgage-Backed Securities (CMBS)
• Auto loan/lease ABS
• Credit card ABS
• Student loan ABS
• Equipment lease ABS
• Other

Market, By Maturity Level

• Short term
  • Residential Mortgage-Backed Securities (RMBS)
  • Commercial Mortgage-Backed Securities (CMBS)
  • Auto loan/lease ABS
  • Credit card ABS
  • Student loan ABS
  • Equipment lease ABS
  • Other
• Long term
  • Residential Mortgage-Backed Securities (RMBS)
  • Commercial Mortgage-Backed Securities (CMBS)
  • Auto loan/lease ABS
  • Credit card ABS
  • Student loan ABS
  • Equipment lease ABS
  • Other

Market, By Issuer Types

• Financial institutions
• Captive finance companies
• Specialty finance companies
• Government-Sponsored Enterprises (GSEs)
• Others

Market, By Structure

• Pass-through securities
• Collateralized Mortgage Obligations (CMOs)
• Collateralized Debt Obligations (CDOs)
• Asset-Backed Commercial Paper (ABCP)

Market, By Issuance Type

• New issuance
• Re-securitization

The above information is provided for the following regions and countries:

• North America
  • U.S.
  • Canada
• Europe
  • UK
  • Germany
  • France
  • Russia
  • Italy
  • Spain
  • Rest of Europe
• Asia Pacific
  • China
  • India
  • Japan
  • Rest of Asia Pacific 
• Latin America
  • Brazil
  • Mexico
  • Argentina
  • Rest of Latin America
• MEA
  • UAE
  • South Africa
  • Saudi Arabia
  • Rest of MEA