2026 ABS East Conference Takeaways: Overcast Skies

ABS East highlighted a cautious outlook, with participants expecting wider spreads and higher rates due to increased leverage and inflation. While opinions on AI's impact varied, from wealth creation to increased defaults, the consensus leaned towards greater scrutiny of issuers and more volatility.

Mortgage ABS discussions focused on extension risk for non-QM loans rather than credit risk. Data center ABS also raised structural concerns, with investors seeking lower leverage and more amortization. Issuers are pausing deals amid higher rates, but private credit is leveraging AI for efficiency.

For insurers, opportunities lie in expanded residential mortgage access and careful selection of non-QM issuers. Data center ABS may offer attractive entry points with improved structures, while fund finance and CFOs continue to evolve. With potentially lighter issuance, deep issuer research will be key.