Channel 11 host Ken Shinoda invites fellow DoubleLine portfolio manager Andrew Hsu to discuss asset-backed securities (ABS). ABS securitize a diverse array of non-mortgage assets, including legacy assets such as credit card, auto loan and student loan receivables, and new areas such as energy projects, transportation infrastructure and data warehousing. Mr. Hsu begins (0:57) with the growth of this sector of the fixed income universe. ABS issuance has more than doubled from $129 billion in 2008 to $293 billion in 2021. The mixture of assets funded via structured finance deals also has changed as the sector has evolved to welcome new assets such as clean-energy and data-storage infrastructure. Esoteric assets, which represented $3 billion or 2.3% of ABS issuance in 2008, accounted for $104 billion or 35.4% in 2021.
Among other issues, Messrs. Shinoda and Hsu discuss the advantages and disadvantages of ABS bond structures versus unsecured corporate bonds (6:35), the significant but underappreciated transparency of ABS (12:52), the importance of active management in ensuring an alignment of interests between ABS issuers and ABS investors (17:01), the recent bifurcation between the performance of fintech lenders’ stocks and the receivables they’ve securitized (20:41) and the three areas of growth and change in structured finance (22:44) that Mr. Hsu is tracking most closely.
Mr. Shinoda joined DoubleLine at inception in 2009. He is Chairman of the Structured Products Committee and oversees the non-Agency RMBS team specializing in investing in non-Agency mortgage-backed securities, residential whole loans and other mortgage-related opportunities. Mr. Shinoda is co-Portfolio Manager on the Total Return, Opportunistic Income, Income, Opportunistic MBS and Strategic MBS strategies. He is also lead Portfolio Manager overseeing the Mortgage Opportunities private funds. Mr. Shinoda is also a permanent member of the Fixed Income Asset Allocation Committee, as well as, participating in the Global Asset Allocation Committee. In addition, he hosts DoubleLine’s “Channel 11 News” (Twitter @DLineChannel11, dline11@doubleline.com), a webcast series that provides market insights and commentary with peers and industry experts. Prior to DoubleLine, Mr. Shinoda was Vice President at TCW where he worked in portfolio management and trading. He holds a B.S. in Business Administration from the University of Southern California and is a CFA® charterholder.
Mr. Hsu joined DoubleLine at its inception in 2009. He is a Portfolio Manager for the DoubleLine Total Return and ABS/Infrastructure Income strategies. Mr. Hsu is a permanent member of the Fixed Income Asset Allocation and Structured Products Committees. Prior to that, he was responsible for analysis and trading of structured products, where his focus included residential MBS and ABS transactions. Mr. Hsu’s responsibilities have also included structuring and negotiating terms on new-issue transactions and forming strategic partnerships with issuing entities in order to participate in key transactions. Prior to DoubleLine, he worked at TCW from 2002, where he focused on credit analysis for structured product securities and co-managed two structured product funds centered on debt and equity investments. During that time, Mr. Hsu was actively involved with portfolio management decisions and investment analysis, including reverse engineering complex CDO/CLO structures. He holds a BS in Finance from the University of Southern California and is a CFA® charterholder.
