European ABS 2024 Credit Outlook

This commentary highlights our views on the key factors and risks likely to affect the performance of portfolios of auto loans and leases, consumer loans, revolving credit and credit cards, and commercial leases in Europe in 2024. We also highlight the impact of these trends on our existing credit ratings in the aforementioned sectors for 2024.

Consumers demonstrated significant resilience to high interest rates and high inflation, and even if further credit performance deterioration is expected, such deterioration is likely to be limited. Although non-prime and near-prime portfolios (and or non-captive autos) may deteriorate more markedly, the outlook for credit ratings remains stable across the board for European asset-backed securities (ABS) transactions.

Structural credit protection in the ABS transactions should be sufficient to counter the mild asset performance deterioration expected in 2024. Furthermore, we may see some positive credit rating actions as a result of deleveraging and other structural features.

In 2023, total ABS issuance increased substantially to EUR 61 billion, with the sector largely dominated by autos with EUR 30 billion issued. For 2024, we expect issuance to remain strong and expect total European ABS issuance just above EUR 50 billion, with autos expected to be around EUR 25 billion.