Securitization in Focus—August 2026

Douglas Gimple
Client Portfolio Manager

Headlines

• Credit Card Asset-Backed Securities (ABS). In aggregate, credit card ABS reached $12.3 billion year to date versus $16.5 billion for all of 2025. The sector has seen two debut issuers this year—Robinhood and Prosper. Prosper is new to credit card ABS but has been in the unsecured consumer loan ABS sector since 2017. Charge-offs dropped 0.28% year over year to 1.90% for August, holding below 2% for the second consecutive month and the lowest since the stimulus-fueled pandemic lows in late 2023.^1,2
• Auto ABS. The lower-income segment of the market remains the weakest performing from an absolute delinquency perspective, while the higher-income segment has seen the largest year-over-year increase in delinquencies. More recently, however, deterioration rates have converged across income groups. Even as lower income borrowers are expected to continue deteriorating, the pace of deterioration for higher-end borrowers should decelerate.³
• Personal Loan ABS. Consumer debt growth has slowed, while underwriting standards remain relatively tight. Delinquency trends appear more stable than headline credit bureau data may suggest.

It is important to note that personal loans are unsecured and carry additional risk relative to other forms of consumer credit. In financial stress scenarios, consumers tend to prioritize payments for auto loans to avoid repossession and credit cards to preserve revolving liquidity. Personal loans can vary considerably based on credit quality (prime versus non-prime), method (online, brick and mortar or point of sale), loan term and promotional structure.

Throughout 2Q26 earnings calls, ABS sponsors reported constructive results due to strong growth in origination, while others noted improving credit trends. Management teams continued to highlight pressure on lower-income borrowers and non-prime segments but noted that newer vintages (under tighter underwriting standards) are generally outperforming older cohorts.

Exhibit 1: Despite ongoing geopolitical and fiscal uncertainty, spreads across risk assets remain tight (in basis points)

Source: Bloomberg; data as of August 31, 2026.

Asset-Backed Securities Issuance⁴

• Issuance typically slows during the hot summer months, and August 2026 was no exception. After a torrid pace over the prior four months ($33.8 billion monthly average), issuance eased to $27.2 billion in August.
• Despite the August slowdown, full-year issuance remains on pace to surpass both 2024 and 2025 levels, barring an unforeseen slowdown beyond the typical December slowdown.
• Auto ABS typically consists of roughly half of overall ABS issuance, but August was particularly auto heavy, with the sector representing 67.5% of issuance. Activity in several recently active areas of the market, including data centers and fiber, slowed during the month.
• Although issuance trailed off in the second half of August, September is gearing up to be issuance heavy. Despite a late Labor Day (September 7), September could emerge as the busiest issuance month of the year.

Commercial Mortgage-Backed Securities (CMBS) Trends in August⁵

Sector trends

• Overall delinquencies. -0.01% to 7.85%, continuing the fluctuating trend but at a greater clip than previous months.
• Delinquency rate. Year over year +0.56% (7.29 % to 7.85%).
• Serious delinquency rate. +0.12% month over month (7.57% to 7.69%). Represents the percentage of loans that are 60+ days delinquent, in foreclosure, real estate owned or non-performing.
• The five largest newly delinquent loans included office towers in Chicago, Los Angeles and Washington, D.C., an office portfolio spanning Washington, D.C. and Northern Virginia, and a New Orleans hotel.

By property type level

• Multifamily. Flat at 7.69%.
• Office. +0.09% to 12.00% with loans exiting delinquency helping to offset poorly performing loans tied to an office complex in the Washington, D.C. and Northern Virginia area.
• Lodging. +0.49% to 5.84%, marking the second consecutive month of increase, fueled by newly delinquent hotels in New Orleans and a national hotel portfolio.
• Retail. +0.24% to 7.20% with newly delinquent regional malls outweighing loan cures from other malls that were brought back to performing status.
• Industrials. +.01% only, to 1.14%.

Non-Agency Residential Mortgage-Backed Securities (RMBS)⁶

As in other areas of the securitized market, non-agency RMBS issuance typically slows in August. August’s issuance was slightly ahead of the prior months’ average level ($18.9 billion) as the market brought an additional $19.6 billion to market during the month. Despite the slowdown, the sector is on pace to surpass 2025’s $194 billion in issuance, though the specter of higher rates could temper activity.

Non-qualified mortgage (QM) issuance market continues to dominate the market, accounting for roughly 43.2% of August issuance, slightly above levels since the beginning of the year. Non-QM loans offer greater flexibility in borrower eligibility and documentation requirements than mortgages meeting Consumer Financial Protection Bureau standards.

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1 Prosper Marketplace Issuance Trust.
2 J.P. Morgan ABS Update; data as of August 31, 2026. 
3 Bank of America ABS Weekly; data as of August 31, 2026. 
4 Source: Deutsche Bank; data as of August 31, 2026.
5 Source: Trepp; data as of August 31, 2026.
6 Source: Deutsche Bank; data as of August 31, 2026.

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