The deal has a relatively high exposure to commercial and industrial customers. Non-residential ratepayers account for 55% of its customers and about 47% of its revenue.

Financially stressed consumers nearing their credit limit use buy now/pay later loans to finance smaller purchases, while wealthier households want to avoid paying interest or carrying a balance on credit cards for bigger-ticket items, according to the New York Fed.

For the first time since mid-December, the Freddie Mac survey reports mortgage rates over 6.7%.

HBAN will service the transaction, with an A3 rating for long-term, senior unsecured debt, an A2 long-term credit assessment, and P-1 for short-term deposits.

The company was able release credit reserves because of actual and forecasted prices that boosted net income, CEO Priscilla Almodovar said.

The notes benefit from total hard target credit enhancement of 16.50%, with an estimated 4.02% in estimated excess spread per year.

Like a growing number of auto ABS deals, the pool has more battery electric vehicles, which represent 10.6% of the pool, compared with 3.8% on the previous deal, FCAOT REV 2023-1.

The government-sponsored enterprise financed 955,000 mortgages last year, down from the 1.8 million loans it backed in 2022.

Consumer obligors represent a slight majority of the pool, 54%, while loans to commercial obligors represent the remaining 46%.

Shared services organizations PSCU and Co-op Solutions are offering post-purchase buy now/pay later loans, with the goal of reaching consumers who are concerned about managing their credit.

In the current pool, some 77.4% for all three pools are composed of tier A loans. This is slightly higher than the concentrations of tier A loans seen in several previous deals.

January volume increased 36% compared to the month before and the annual decline in activity was the lowest in almost two years, Optimal Blue said.