Two Markets, One Name: What Global ABS 2026 Reveals About the Future of Structured Finance

Global ABS – the largest annual gathering of structured finance practitioners – convened in Barcelona this week. Over three days of panels and roundtables, several themes emerged with particular clarity. Here’s the LendInvest take on the conversations that matter most for institutional investors in UK residential and specialist lending:

The Market Has Effectively Split in Two

One of the most striking observations from the opening market outlook panel was not a forecast but a structural diagnosis: the entity we still call ‘the ABS market’ has, in practice, become two very different markets operating under the same name.

On one side sits the traditional public securitisation market — standardised, rated, and largely liquid. On the other is a fast-growing private structured credit universe: bespoke, bilateral, and expanding at a pace that makes aggregate measurement difficult. As one senior research head put it plainly from the stage, calling the conference ‘Global ABS’ had become somewhat restrictive — the market had evolved well beyond that label.

“If you take UK out and take CLOs out, you are looking at roughly 55 billion euros of issuance. The EU securitisation market is more or less equal, on an apples-to-apples basis, to Brazil, to Australia, to India.”

Senior structured finance research head, opening market outlook panel, Global ABS 2026

According to figures cited by panellists, European investor-placed securitisation issuance reached approximately 160 billion euros in 2025 — up 13% on the prior year — with 2026 volumes running a further 15-20% ahead. Growth is real, but heavily concentrated in CLOs and synthetic risk transfer. Outside those two segments, the market remains, by global standards, remarkably thin. Meanwhile, forecasts for asset-based finance growth range from $10 trillion to $25 trillion over the coming decade — a contrast that illustrates just how far the two halves of the market have diverged.

Credit Performance: Stable, With Pockets of Stress

The performance outlook for European structured finance was characterised by panellists as stable to slightly deteriorating. Representatives from Fitch Ratings noted they had moved their ABS outlook from neutral to deteriorating in April — driven not by alarming absolute delinquency levels but by a slow upward trend through the 2023 and 2024 origination cohorts. Factors cited included post-pandemic rate normalisation, cost-of-living pressure feeding through to consumer credit, and evidence of loosened underwriting standards during the growth phase of the cycle.

UK RMBS was presented by ratings agency panellists as a relative point of stability. Tight post-2008 underwriting standards, and the fact that most UK borrowers on short-term fixed deals had already refinanced to higher rates, meant the rate shock had largely been absorbed. The one carve-out identified was the UK non-conforming tail — older vintage transactions approaching maturity, where panellists said cumulative default expectations continue to edge upward.

“The sub-market where we see underperformance is clearly the UK non-conforming market at its tail end. The big maturity events come between 2030 and 2042, and we expect defaults in the run-up to continue to increase.”

EMEA structured finance ratings lead, market outlook panel, Global ABS 2026

For investors in newer-vintage, specialist UK residential lending with conservative loan-to-value ratios, the picture painted at Barcelona was reassuringly distinct from the stress visible in older non-conforming books or the leveraged credit market.

Insurance Capital Is Returning — and the Implications Are Significant

Perhaps the most consequential near-term development discussed across multiple panels was the re-entry of insurance capital into the senior tranche of UK structured residential product, enabled by the Solvency UK matching adjustment reforms. Panellists described the shift as meaningful: for over a decade, life insurers’ participation in securitisation had been constrained by capital treatment that made holding securitisation exposures punitive. The extension of matching adjustment eligibility to ‘highly predictable’ cashflows has opened a new channel — with panellists citing AAA-rated retirement interest-only notes pricing at SONIA plus 72 basis points in secondary as recently as summer 2025, converging toward prime RMBS levels.

“To kick-start this market without insurers playing in the senior space, and banks playing in the senior space as a starting point, is going to be a very slow process. Thank God we got the insurance back. Now we want the banks.”

Chief Transformation Officer, PCS — securitisation regulation panel, Global ABS 2026

A broader insurer investor base in UK residential securitisations reduces funding costs and deepens liquidity across the capital stack — a structural positive for the specialist lending sector.

What This Means for UK Alternative Lending

Taken together, the conversations at Global ABS 2026 sketch a market context that is, on balance, favourable for well-established UK specialist lenders – though not without nuance. The structural growth of private structured credit validates the institutional direction of travel: capital is actively seeking short-duration, asset-backed, income-generating exposure. The bifurcation of the market, in panellists’ framing, rewards platforms with genuine origination capability, track records, and underwriting discipline — precisely the attributes that differentiate credible specialist lenders from the broader field.

The credit performance picture counsels selectivity. The distinction between newer-vintage, tightly underwritten specialist lending and older non-conforming stock is increasingly visible in performance data and, in the assessment of rating agency panellists, increasingly understood by sophisticated investors.

The overarching message from Barcelona was that regulation can create the conditions for a market but cannot create the market itself. The animal spirits — volume, investor confidence, originator track records — have to come from practitioners. That remains as true in UK specialist residential lending as anywhere else in structured finance.

This article reflects the author’s observations from panels attended at Global ABS 2026, Barcelona, June 2026. Statistics and market data cited are as quoted or referenced by panellists and have not been independently verified. Views expressed do not constitute investment advice.