And there are early signs that risk is creeping higher for the bonds. Borrower delinquencies edged higher in February from the same month last year, according to an April 8 note from S&P Global Ratings. Subprime borrowers could increasingly struggle to make their payments in the coming months as they deal with the highest inflation in 40 years.
These risks seem manageable to many analysts and investors, in part because many consumers still have pandemic savings to dip into if they have to, and bonds have ample protections for investors.
“The market is not crashing, it’s normalizing,” said Alin Florea, auto ABS strategist at Barclay Plc, in a phone interview.
This article was provided by Bloomberg News.