ING cautions: Beware the pain in Spain over asset-backed securities

ING's Annemieke Coldeweijer has cautioned investors not to be bullish on peripheral European debt, warning the tightening in spreads in the asset-backed securities market could cause pain for investors.

Asset-backed securities have boomed despite being badly hit in the financial crisis, posting double-digit returns in 2012 and 2013. But Coldeweijer, a senior investment manager covering ABS, said the tightening of spreads in the periphery, despite continuing issues, is a warning sign. “In the periphery in 2013, we saw a strong tightening in spreads, mostly driven by technicals – a search for yield and lack of issuance,” she said. “However, there is still some volatility in the market: Spanish ABS tightened so much you would think all the empty houses had been sold and everyone had ...