NEW YORK -

Kroll Bond Rating Agency (KBRA) offered a recap of the Structured Finance Association’s annual SFVegas conference, which unfolded last week for the first time since before the pandemic.

Analysts said new issuance into the structured finance markets, including auto finance, hit $567 billion through the first nine months of the year. KBRA said that amount is 69% higher versus 2020 volumes and 37% compared to the same period in 2019.

KBRA then delved into its observations and reactions from what unfolded in Las Vegas.

“Based on our discussions with issuers across each of the structured finance sectors, activity in primary markets is showing no signs of cooling off,” KBRA said in a report. “We expect new issue supply to remain elevated through Q4 and well into 2022 as issuers take advantage of the current low interest rate environment to lock in attractive pricing.

“Conversely, some investors expressed frustration that demand was outstripping supply enough that the rewards were not compensating them for the risks, particularly in deals with exposure to lower credit quality borrowers. They seemed to suggest that the issuers were experiencing outsize benefits to the detriment of debtholders,” analysts continued.

In terms of credit fundamentals, KBRA indicated the consensus among the market participants analysts spoke to was generally bullish.

“Throughout the past 18 months, multiple rounds of government stimulus, coupled with generous loan forbearance and hardship relief programs, have held consumer ABS and RMBS delinquency and loss rates in check,” analysts said. “However, as most of these consumer safety net programs are now rolling off, many expected a gradual normalization in credit performance in 2022.”