UK

This year has been a big one for sterling bond supply, especially in the ABS market. With the end of the Bank of England’s Term Funding Scheme and the comeback of traditional bank issuers, UK issuance volume year-to-date has totalled €25bn from 38 deals placed across different asset classes.

This morning the much anticipated Q3 2018 Credit Conditions Survey was released by the Bank of England.

In the early 1990s, Marvel comics introduced a world 100 years in the future with new stories for its popular heroes and villains. Doctor Doom's story was called "The Doom of Tomorrow".

Since that first encounter the market has remained a core financing option for banks’ consumer and corporate lending books, but there has always been a degree of innovation around the fringes.

UK specialist insurer Rothesay Life came to the market yesterday, the latest company to issue in the fledgling RT1 sector introduced by the regulator as Solvency II compliant capital.

Last year, with credit spreads tightening close to historic levels, it seemed appropriate to us to take a more prudent stance and move to a more balanced portfolio.

Now that the summer lull has finally kicked in, it seems an ideal time to review the ABS market so far this year and try to make a prediction for the remainder of 2018.

Following on from the release of solid Q2 numbers, and no longer in a closed-period, Barclays were quickly out of the blocks and announced the issue of a new AT1 this morning; a $2bn transaction with initial price talk of 8%.

Even in the midst of a busy earning season, discussions on central bank policy never seem to go away.

The area that caused the most concern in the Q1 report was the big drop in availability of unsecured credit to households; however, availability was unchanged in Q2, thanks in particular to a change in appetite for risk from lenders, and also an improvement in market share objectives.

In the past two years the diversity of supply in the ABS market has been restricted by the availability of cheaper funding alternatives, both in the Eurozone through the TLTRO and in the UK, where the BoE Term Funding Scheme has suppressed issuance from the traditional banks and building societies.

Credit metrics, as measured by the rating agencies, continued to improve throughout the first half of this year, with all corners of the globe having comfortably more upgrades than downgrades.