BofA ABS Weekly Personal loan ABS 2026 10 09

Spreads widened on broader market concerns 09 October 2026

Spreads for all ABS sectors widened over the week and have left all sectors trading Securitized Products Strategy above their respective 24-month minimums and closer to their respective 24-month United States average. Eleven sectors are currently trading 20bp or more above their respective 24- month minimums. At the low end, the retail auto lease ABS sector is trading just 8bp Chris Flanagan FI/MBS/CLO Strategist above its 24-month minimum, while data center ABS sector sits at the high end at 45bp BofAS above its 24-month minimum. We continue to believe spreads will be rangebound (+/- bp WoW) but still feel they are biased wider spreads. This likely means most sectors Theresa O'Neill will continue to trade closer to their respective 24-average than 24-month minimum. We ABS Strategist still selectively prefer the higher yielding sectors (solar, data center, aircraft, fiber, and BofAS railcar ABS sectors). We continue to prefer ABS over HG corporates. Click links for ABS new issue volume and pricing by deal and ABS Spreads time series. Alvin Fung ABS Strategist Outlooks for volume & credit BofAS Full year 2026 new issue volume for personal loan ABS expected to reach $34bn across

traditional ($8bn), fintech/MPL ($18bn), and home improvement ($8) loans. So far this Zelda Wagner ABS Strategist year, $8bn has been issued. We expect softer credit performance across most types of BofAS consumer debt and consumer-related ABS, with increasing prospects for stabilization heading into next year. The delinquency rate (DQ) for traditional personal loans has been trending lower since peaking earlier this year. The DQ rate for fintech/MPL personal loans has also been trending lower since peaking in 2023. The DQ rate for home See Exhibit 47 on page 22 for improvement loans had been trending lower after peaking in 2024 but more recently has commonly used acronyms been trending higher Recurring charts & tables Prefer home improvement loans New issue volume: Exhibit 1, We prefer personal loan ABS over subprime auto loan ABS for the incremental spread, Exhibit 2, Exhibit 46. despite having a slightly more negative credit view for personal loans than subprime Spreads: Exhibit 7 to Exhibit 9 loans. We continue to prefer “traditional” platforms (lender with branches) over “fintech/Market Place Lending” platforms. Further, we prefer home improvement loans. Click Links to Must Read Reports Across all three sectors, we favor platforms with a demonstrated track record in the Overview reports securitization market, including consistent ABS market access, some degree of 2026 Year Ahead Outlook (ABS), 2H 2026 Outlook, 1H 2026 Review, secondary trading activity, and a history of ratings upgrades rather than downgrades. We 2Q26 & 1H26 new issue volume, are cautious on platforms that have breached performance triggers. Total and Excess returns for the ABS market, ABS Ratings Actions Data Show During August, total consumer credit rose by 2.7% YoY to $5.2tn. Non-revolving debt Market Updates increased by 2.5% YoY to $3.8tn while revolving debt increased 3.4% YoY to $1.4tn. Consumer credit scorecard, Within credit cards, borrowers with credit scores below 660 have seen increases in their Payment water, Under the hood, share of new accounts, new commitments and average purchase volumes. Promotional- Auto ABS, Credit card ABS, Personal rate usage has declined, while revolving balances and the share of accounts paying in full loan ABS, Solar ABS, FFELP & have both increased. The higher share of new accounts with credit scores below 660 and private student loan ABS, Timeshare higher revolving balances could become head winds for credit metrics. ABS; Aircraft ABS, Container ABS, Digital Infrastructure ABS, Equipment ABS, Railcar ABS This document is intended for BofA Securities institutional investors only. It may not be distributed to financial advisors, retail clients or retail prospects. BofA Securities does and seeks to do business with issuers covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this…