Asset-Backed Securities Industry Statistics 2024: Market Size, Trends, and ESG Impact
Barry Elad
Updated · Nov 23, 2024
In the world of finance, asset-backed securities (ABS) have become a cornerstone, enabling investors to access revenue streams from diverse asset classes like auto loans, mortgages, and student loans. ABS provides a unique opportunity to bundle these assets into marketable securities, giving investors exposure to cash flow-generating assets while offering businesses access to liquidity. By 2024, the ABS market is poised to grow even further, thanks to a combination of financial innovation, investor interest, and regulatory adaptations. This article delves into the latest market statistics, key trends, and significant developments that shape the ABS landscape today.
Editor’s Choice: Key Trends
- Global ABS market size is expected to surpass $2.2 trillion by the end of 2024, reflecting a steady compound annual growth rate (CAGR) of 5.7% over the past decade.
- The US ABS market continues to dominate, accounting for nearly $1.6 trillion in securities issued in 2023, representing approximately 73% of the global market share.
- Auto loan ABS remains the largest segment, with an issuance of $250 billion in 2023, showing an 8% year-over-year increase due to rising vehicle sales and financing demand.
- Student loan ABS saw a significant increase in issuance, reaching $50 billion in 2023, a jump of 15% from 2022, driven by higher student enrollment and education costs.
- Mortgage-backed securities (MBS) also contribute significantly, with new issuances totaling $400 billion in 2023, despite ongoing challenges in the housing market.
- Credit card ABS issuance declined slightly to $100 billion in 2023, largely due to consumer spending shifts and increasing interest rates.
- The European ABS market experienced a resurgence, growing by 10% year-on-year, fueled by regulatory reforms and demand for securitized products in the $600 billion market.
Asset-Backed Securities Market Size
- The global ABS market reached $1.9 trillion by the end of 2023, demonstrating a robust recovery post-pandemic and benefiting from renewed investor confidence in securitized assets.
- By 2024, the market size is expected to grow by 15%, potentially crossing the $2 trillion mark, driven by innovations in digital asset securitization and increased participation from institutional investors.
- In the United States, the ABS market has grown to over $1.5 trillion, representing 70% of the global issuance volume in 2023, with expectations to maintain this dominance in 2024.
- European markets saw a market size increase to $450 billion by the end of 2023, primarily led by the UK and Germany, as economic stability returned to the region.
- Emerging markets like China and India are increasingly becoming active participants, with ABS issuance projected to rise by 20% annually in these regions.
- The auto loan ABS market is set to continue its dominance, representing 25% of the total global ABS market by 2024.
- The growing popularity of green ABS (focused on environmentally sustainable projects) is expected to add $100 billion to the market by 2025, reflecting a significant CAGR of 12%.
Asset-Backed Securities Market Trends
- Digital securitization has emerged as a key trend in the ABS market, leveraging blockchain technology to tokenize traditional assets like mortgages and car loans, enhancing transparency and liquidity.
- The demand for green ABS and socially responsible investments (SRI) is accelerating, with $50 billion worth of green ABS issued globally in 2023, a 35% increase from 2022.
- Non-performing loan (NPL) securitizations are becoming more prevalent in Europe, with $30 billion in securitized NPLs issued in 2023, up 20% from the previous year.
- Synthetic ABS, which does not require physical assets, saw a 15% growth in 2023, allowing financial institutions to transfer risk more effectively while improving capital efficiency.
- The rise in direct-to-consumer auto financing has driven significant growth in auto loan ABS, with $250 billion issued in 2023, reflecting a 10% year-over-year rise.
- Interest rate volatility has influenced the ABS market, with higher interest rates leading to a 10% decrease in credit card ABS issuance in 2023, as consumers shift towards lower-cost financing options.
- Hybrid ABS, combining multiple asset types (like auto loans and credit cards), are increasingly popular, with $150 billion issued in 2023, reflecting a 25% growth as investors seek diversified exposure.
Types of Asset-Backed Securities
- Auto loan ABS continue to be a dominant force, accounting for 40% of total ABS issuance in the US by 2023. This is primarily due to the strong demand for vehicle financing and a rebound in the automotive industry.
- Residential mortgage-backed securities (RMBS) represent 30% of the total ABS market globally, with new issuances reaching $400 billion in 2023. RMBS remains attractive to investors due to its relatively lower default risk.
- Commercial mortgage-backed securities (CMBS) saw a resurgence in 2023, with issuance levels hitting $150 billion, driven by increasing demand in the commercial real estate sector, particularly in industrial and warehousing properties.
- Credit card receivable ABS account for 20% of total US ABS issuance. In 2023, over $100 billion was securitized, reflecting stable consumer spending trends, despite rising interest rates.
- Student loan ABS has grown to 10% of the US ABS market, with $50 billion in new issuances in 2023, a sharp increase compared to the previous year due to rising education costs and student enrollment.
- Equipment lease ABS, which pools revenues from leased commercial equipment, grew to $20 billion in 2023, showing a 12% increase year-over-year as businesses sought asset-backed financing for capital investments.
- Esoteric ABS classes like aircraft leases and royalty payments also expanded in 2023, reaching $30 billion in global issuance, as investors increasingly seek niche asset classes with diversified revenue streams.
Major Asset Classes in ABS (Auto, Mortgage, Credit Card, Student Loans)
- Auto loan ABS remains a robust asset class, with $250 billion issued in 2023, a growth rate of 8% compared to 2022, driven by increased consumer demand for vehicle financing and low default rates.
- Residential mortgages (RMBS) saw a total issuance of $400 billion in 2023, accounting for a significant portion of the ABS market as the housing sector showed resilience, particularly in high-demand urban areas.
- Credit card receivables ABS witnessed $100 billion in issuance, down slightly by 5% due to shifting consumer behaviors and increased reliance on debit over credit in a rising interest rate environment.
- Student loans make up 10% of the ABS market, with $50 billion in 2023, representing a 15% increase, propelled by higher tuition fees and increased borrowing among students in the United States.
- Commercial mortgages (CMBS) have re-emerged strongly, with $150 billion in new issuances, signaling a rebound in the commercial real estate market, especially in the logistics and warehousing sectors.
- Equipment lease ABS grew steadily, with $20 billion issued in 2023, as businesses sought financing solutions to expand operations and invest in high-cost capital equipment.
- Esoteric ABS, including aircraft leases and intellectual property-backed securities, contributed $30 billion in global issuance, a niche but rapidly growing segment as investors look for alternatives to traditional asset classes.
Asset-Backed Securities Market Share
- The US remains the largest ABS market, with $1.6 trillion in total securities issued in 2023. This dominance is expected to continue through 2024, driven by strong investor demand.
- Europe’s ABS market share reached $450 billion. The resurgence is credited to favorable regulatory reforms and increased securitization in the UK and Germany.
- Emerging markets such as China and India are rapidly expanding their presence in the global ABS market, with an expected 20% growth rate year-over-year. By 2024, China’s ABS market could top $100 billion.
- Auto loan ABS represents the largest asset class in the global market, holding 30% of the total market share, reflecting the resilience and growth of the automotive financing industry.
- Residential and commercial mortgage-backed securities together account for 50% of the total ABS market globally, driven by strong housing and commercial real estate sectors in developed markets.
- Credit card ABS remains a significant portion of the US market, with a 20% market share, although issuance volumes have slowed due to evolving consumer credit behaviors and economic conditions.
- Green and ESG-focused ABS are gaining momentum, with a $50 billion market share in 2023, expected to grow at a 15% CAGR by 2025 as investors increasingly prioritize sustainability.
Investor-Friendly Features of Securitized Credit
- Liquidity: ABS offers higher liquidity compared to traditional bonds, with investors able to trade them easily in secondary markets, making them attractive for those seeking flexible investment options.
- Diversification: ABS provides access to a wide variety of asset classes, allowing investors to diversify their portfolios across sectors like auto loans, credit card receivables, and mortgage-backed securities.
- Credit enhancement: Most ABS come with built-in credit enhancement features, such as over-collateralization or reserve funds, providing investors with a buffer against potential losses.
- Stable returns: ABS typically offers fixed-rate coupon payments, providing investors with predictable and stable returns, which is especially appealing during periods of market volatility.
- Customizable risk exposure: With ABS, investors can choose tranches with varying risk profiles, from senior tranches, which offer lower risk and lower returns, to junior tranches, which offer higher returns but also carry more risk.
- Regulatory oversight: The Dodd-Frank Act and similar regulations have imposed stringent requirements on ABS issuers, ensuring greater transparency and reducing the likelihood of market disruptions.
- Green ABS opportunities: Investors are increasingly drawn to green ABS, which allows them to align their investment strategies with Environmental, Social, and Governance (ESG) objectives, providing both financial returns and social impact.
Issuance and Trading Volumes
- The global ABS issuance in 2023 reached $1.9 trillion, with the US contributing $1.6 trillion, making it the largest market. This represents an increase of 8% compared to 2022.
- European ABS issuance rose by 10%, with a total of $450 billion in 2023, marking a resurgence in the region after years of regulatory uncertainty.
- Auto loan ABS issuance accounted for 25% of the global market, with $250 billion issued in 2023, making it one of the largest and most stable asset classes.
- Credit card ABS trading volumes decreased by 5% in 2023, reflecting changing consumer credit behavior in the wake of rising interest rates and inflationary pressures.
- Student loan ABS issuance surged to $50 billion in 2023, reflecting a 15% increase driven by growing student debt levels and higher education costs.
- Green ABS continues to grow rapidly, with $50 billion issued in 2023. This represents a 35% increase from 2022, as investors seek sustainable investment opportunities.
- Trading volumes for synthetic ABS grew by 12%, offering more efficient risk-transfer mechanisms for financial institutions, particularly in Europe and the US.
Regulatory Developments and Challenges
- The Dodd-Frank Act continues to influence the US ABS market, with stringent regulations aimed at ensuring transparency and risk management in the securitization process.
- In 2023, the European Union introduced new regulations under CRR II (Capital Requirements Regulation II), tightening the criteria for high-quality ABS, and impacting issuance processes in the region.
- Basel III guidelines, which mandate stricter capital requirements for banks, have made it more expensive for institutions to hold ABS, thereby influencing issuance volumes and risk retention strategies.
- The implementation of Simple, Transparent, and Standardized (STS) securitization in Europe has streamlined processes, leading to a 10% increase in issuance by promoting investor confidence in securitized products.
- Emerging markets face challenges with regulatory frameworks for ABS, with countries like India and China still in the process of refining laws around securitization to encourage more market participation.
- Cybersecurity risks have become a growing concern in ABS markets, with issuers being required to enhance data protection measures, especially as digital securitization platforms become more popular.
- The LIBOR transition has posed challenges to the ABS market, with issuers working to transition to SOFR (Secured Overnight Financing Rate), which became the primary benchmark in 2023, affecting pricing and valuation mechanisms.
Role of Financial Institutions and Major Issuers
- JP Morgan Chase remains the largest issuer of ABS globally, issuing over $150 billion in 2023, maintaining its position as a leader in auto loans, mortgage-backed securities, and credit card ABS.
- Citibank saw a 10% increase in ABS issuance, with a total of $120 billion in 2023, largely due to growth in consumer credit and corporate financing demand.
- Bank of America issued $90 billion worth of ABS in 2023, expanding its portfolio in RMBS and auto loans, accounting for 15% of the US ABS market.
- Wells Fargo played a significant role in the commercial mortgage-backed securities (CMBS) market, issuing $50 billion in 2023, and benefiting from the rebound in commercial real estate.
- Goldman Sachs increased its focus on esoteric ABS, issuing $20 billion in niche areas such as aircraft leases and intellectual property-backed securities, contributing to its diversified ABS portfolio.
- In Europe, Deutsche Bank saw a 20% increase in ABS issuance, with a focus on auto loan ABS and green securitizations, contributing to a total of $45 billion in 2023.
- Santander Consumer USA emerged as a key player in auto loan ABS, issuing $30 billion in 2023, reflecting strong consumer demand for vehicle financing in North America.
| Institution | Issuance Volume (in $Billions) | Key Focus Areas |
| JP Morgan Chase | 150 | Auto loans, mortgage ABS |
| Citibank | 120 | Consumer credit, corporate financing |
| Bank of America | 90 | RMBS, auto loans |
| Wells Fargo | 50 | Commercial mortgage ABS |
| Goldman Sachs | 20 | Esoteric ABS (aircraft, IP) |
| Deutsche Bank | 45 | Auto loans, green ABS |
| Santander Consumer USA | 30 | Auto loans |
Impact of Artificial Intelligence (AI) in Asset-backed Securities Market
- The adoption of AI-driven analytics in the ABS market has revolutionized credit risk assessment, allowing for faster and more accurate evaluation of underlying assets in 2023.
- Machine learning algorithms are being used to predict default risks more effectively, with 70% of ABS issuers in the US integrating AI tools for credit analysis.
- Automated securitization platforms powered by AI have reduced issuance times by 25%, streamlining the process of bundling and packaging assets for sale to investors.
- AI-based trading systems are optimizing ABS portfolio management, enabling institutions to make real-time adjustments based on market conditions and credit risk changes.
- AI tools are improving the surveillance of securitized assets, providing investors with more detailed, up-to-date insights on asset performance and potential defaults.
- The use of AI in fraud detection within the ABS market has reduced instances of fraudulent asset claims by 15%, safeguarding investors and ensuring market integrity.
- Blockchain-based securitization, combined with AI, is gaining traction, enabling tokenized ABS that offer enhanced transparency, security, and efficiency in trading and settlement processes.
Environmental, Social, and Governance (ESG) Trends in ABS
- The green ABS market reached $50 billion in 2023, with investors increasingly seeking out sustainable investment opportunities that align with ESG goals.
- Social ABS focused on funding affordable housing and public infrastructure projects grew by 30% in 2023, reflecting investor interest in social impact investments.
- Issuers are incorporating ESG criteria into their securitizations, with 40% of new ABS issuances in 2023 including sustainability-linked features, a trend expected to grow in 2024.
- The development of green mortgage-backed securities (MBS), aimed at funding environmentally friendly housing projects, accounted for $10 billion in issuance in 2023.
- Sustainability-linked ABS offers performance-based incentives, where interest rates are reduced if the issuer meets specific environmental or social benchmarks, incentivizing companies to meet ESG objectives.
- European markets are leading the ESG ABS trend, with 20% of all new ABS issuances in the region linked to sustainable or green projects in 2023.
- Investor demand for transparency in ESG reporting has increased, with 65% of ABS investors prioritizing issuers that provide detailed disclosures on the environmental and social impact of the underlying assets.
Asset-backed Securities Market Outlook
- The global ABS market is projected to grow by 6% annually, reaching $2.5 trillion by 2025, driven by technological advancements and increased demand for green ABS.
- US ABS issuance is expected to remain strong in 2024, with projected issuance reaching $1.7 trillion, as the economy stabilizes and investor confidence returns.
- European ABS markets will likely continue their growth trajectory, with $500 billion in new issuance anticipated by 2024, driven by demand for green securitizations.
- The rise of digital securitization platforms is expected to enhance market efficiency, potentially reducing issuance costs by 15% and opening the market to new investors.
- Emerging markets in Asia and Latin America are expected to contribute significantly, with 20% growth forecasted annually as financial infrastructure improves in countries like China, India, and Brazil.
- AI integration in credit analysis and securitization processes is expected to streamline asset evaluation and trading, further enhancing the ABS market’s attractiveness to institutional investors.
- The ESG trend in ABS is likely to accelerate, with $100 billion in green and sustainability-linked ABS expected to be issued by 2025, aligning with global shifts toward socially responsible investment.
Recent Developments
- Increased issuance of green ABS: In 2023, $50 billion worth of green ABS was issued globally, reflecting growing investor demand for sustainable investments.
- SOFR adoption: The transition from LIBOR to SOFR in 2023 impacted ABS markets, with many issuers adjusting pricing mechanisms and benchmarks for new issuances.
- Blockchain technology: The first tokenized ABS transactions occurred in late 2023, highlighting the increasing role of blockchain in enhancing transparency and liquidity in the securitization market.
- Regulatory updates: The European Union’s CRR II rules in 2023 have introduced stricter requirements for securitizations, promoting higher-quality ABS issuances in the region.
- Synthetic ABS growth: There was a 20% increase in synthetic ABS issuance in 2023, driven by financial institutions seeking capital efficiency and improved risk transfer mechanisms.
- AI-driven securitization platforms: The adoption of AI-based platforms in ABS issuance reduced processing times by 25%, making the market more efficient and accessible.
- Emerging markets expansion: Countries like China and India saw double-digit growth in ABS issuance in 2023, highlighting the growing importance of these regions in the global ABS market.
Conclusion
The asset-backed securities (ABS) market continues to evolve, driven by innovation, regulatory reforms, and increasing investor interest in sustainable investments. With the rise of green ABS, AI integration, and the expansion of digital securitization platforms, the ABS market is set for robust growth in 2024 and beyond. As both traditional and emerging markets embrace new technologies and ESG criteria, the future of ABS promises both diversity and resilience in the face of economic and environmental challenges.
Sources
Barry Elad
Barry Elad is a dedicated tech and finance enthusiast, passionate about making technology and fintech concepts accessible to everyone. He specializes in collecting key statistics and breaking down complex information, focusing on the benefits that software and financial tools bring to everyday life. Figuring out how software works and sharing its value with users is his favorite pastime. When he's not analyzing apps or programs, Barry enjoys creating healthy recipes, practicing yoga, meditating, and spending time in nature with his child. His mission is to simplify finance and tech insights to help people make informed decisions.
