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COVID-19 impact on European ABS Price dislocation creates opportunities

Insights

02/04/2020

The European ABS market has experienced incredible price moves, which are now at their most disconnected relative to the fundamental credit resiliency of these instruments since the depths of 2008/9 in our view. This paper is a 4-minute read.

Across the market, European ABS have experienced substantial spread widening, reflecting a flight to safety by investors.
In our opinion current market prices are at their most disconnected relative to the fundamental credit resiliency of these instruments since the depths of 2008/9.
Price declines suggest the market can provide very attractive buying opportunities for the patient, long term investor.

The value of investments will fluctuate, which will cause prices to fall as well as rise and investors may not get back the original amount they invested.