Great Bank Asset Sale Is a Boon for Bond Market: Credit Weekly

Many banks are selling off assets and turning to the bond market to do so, as new global capital rules make it more expensive for them to hold onto certain types of loans. In response to the Basel III endgame regulations, banks are packaging auto loans, equipment leases, and other debts into asset-backed securities. In the US, sales of these securities have reached over $170 billion this year, a 38% increase from the same time in 2023. Europe has also experienced a similar trend. This shift in the banking sector is aimed at adapting to the changing regulatory environment and managing risks effectively.