Tougher auto lending doesn’t mean industry’s bonds are suddenly safer
Interesting article on how "loans" are turned into bonds and how interest rates equal yields (and defaults). I've posted in "securitizations" before, this article might explain it better than I have in the past.
In fact, subprime auto bonds issued in 2015 are by one measure on track to be the worst performing across the history of car-loan securitizations, according to Fitch Ratings. Securitizations are built from bundled loans and resold as bond-like investments called asset-backed securities, or ABS.