Brean Capital has released its Q4 Market Trends and Insights in Commercial Specialty Finance Securitizations, which highlights market trends, sector updates and performance in specialty finance and securitization.

Highlights from the report include:

Current Debt Capital Markets Backdrop

• The Federal Reserve reduced its policy rate by 25 basis points to 3.50-3.75% on December 10, marking the second cut of the quarter and the third of 2025.

• Despite the rate cuts, Treasury yields increased slightly, with the 10-year Treasury rising by 2 basis points, reflecting ongoing inflation concerns.

• Corporate credit spreads remained stable after a temporary widening in early Q2 2025, with the high-yield index closing at approximately 317 basis points, significantly lower than the 500+ basis points seen in late 2023.

• Investment-grade spreads held near 50 basis points, indicating sustained investor confidence in corporate credit quality despite macroeconomic uncertainties.

Equipment Finance Sector Update

• The equipment finance sector dominated Q4 2025 with seven transactions, while only two SMB funding deals were completed.

• Six of the seven equipment deals were from repeat issuers, showcasing a strong market presence.

• Ansley Park Capital executed its inaugural $401 million ABS transaction in November, just 23 months after its launch by Ares Management Corporation.

• The report includes detailed data on various ABS deals, including amounts issued, advance rates, ratings from agencies, and yields.

Small & Midsize Business (SMB) Funding Sector Update

• SMB funding saw two deals priced in Q4 2025, raising $430 million, bringing the full-year issuance to $1.8 billion, which is flat compared to 2024.

• The average deal size in Q4 2025 was $216 million, the highest since Q2 2024.

• Enova International Inc was one of the few issuers to complete multiple transactions in 2025, indicating a slight shift in the market dynamics.

2025 Year in Review Commentary

• The specialty finance ABS market had a solid year in 2025, characterized by strong investor demand amid a dynamic macro environment.

• All-in yields remained attractive, providing compelling entry points for both traditional ABS investors and crossover buyers.

• The market saw a compression in investment-grade and high-yield corporate spreads, leading to increased interest in securitized credit.

• Issuance volumes in equipment finance remained robust, with seasoned originators accessing the market efficiently at attractive levels.

• Investor scrutiny intensified around concentration risks and end-market exposures, particularly for transactions backed by pools with higher concentration to smaller or cyclical end-users.

Primary Market Overview for Equipment Finance and SMB Funding

• The primary market for equipment finance and SMB funding saw a significant number of transactions, with independent equipment finance platforms leading the way.

• Senior bond spreads remained stable, with modest widening observed in some repeat issuers.

• First-time issuer Ansley Park achieved competitive pricing without apparent new issue concessions, indicating strong structural protections.

Secondary Market Activity in Equipment Finance and SMB Funding

• Q4 2025 experienced a 109% surge in secondary trading volume, driven by strong rebounds in both sectors.

• Equipment finance deals averaged $2.6 million per trade, while SMB funding deals averaged $3.8 million per trade.

• Secondary market spreads showed mixed movements, with senior equipment finance bonds remaining stable and junior bonds experiencing pronounced tightening.

New Issue Volume in Equipment Finance

• Q4 2025 marked a strong close for independent equipment finance ABS, with seven issuances raising $3.4 billion, the second-highest quarterly volume in three years.

• Full-year 2025 issuance reached $9.9 billion, representing a 30% year-over-year growth from 2024.

• Dext Capital and EquipmentShare.com were among the companies that priced multiple deals in 2025, indicating a growing trend of repeat issuers.

New Issue Volume in SMB Funding

• SMB funding issuance in Q4 2025 was flat compared to 2024, with a total of $1.8 billion raised.

• The average deal size in Q4 2025 was the highest since Q2 2024, indicating a stabilization in the market.

• Enova International Inc led the SMB funding sector with significant issuance, reflecting its strong market position.

2025 Specialty Finance ABS Landscape

• The specialty finance ABS market delivered solid performance in 2025, characterized by sustained investor demand and attractive yields.

• The market's increasing sophistication in differentiating quality has strengthened the sector, rewarding best practices and disciplining weaker participants.

• Crossover buyers increasingly allocated to securitized credit, attracted by strong structural protections and shorter duration profiles.

• The emphasis on transparency and repeatable execution is expected to remain a defining feature of specialty finance ABS issuance in 2026.

Looking Ahead to 2026

• The market is anticipated to remain accessible to new issuers, especially those supported by conservative capital structures and transparent collateral performance expectations.

• The consistent appetite for well-structured debut deals prioritizing investor protection is expected to continue.

• Crossover buyer presence is likely to persist, providing structural tailwinds for the asset class as corporate spreads remain compressed.

• Specialty finance ABS is expected to play an important role in diversified fixed income portfolios, offering attractive risk-adjusted return profiles.