Originally Posted September 18 2025 – Chart to Watch: US investment-grade ABS exhibit low default rates
The historically low default rates in U.S. investment-grade (IG) asset-backed securities (ABS) can be ascribed to consistent underwriting standards and several investor protections inherent within ABS structures.
Key takeaways:
- Historically, U.S. investment-grade (IG) corporates and asset-backed securities (ABS) have been largely bankrupt remote. Between 2004 and 2024, default rates did not surpass 0.75% and 0.12% in any calendar year for IG corporates and IG ABS, respectively.
- ABS have further benefitted from a key structural advantage of securitized assets – they are funded by a specific pool of assets and backed by the proceeds from those assets, instead of the general financial strength of the issuing company.
- This distinguishing characteristic can help insulate investors from corporate-level distress and is a core reason why securitized structures have tended to be more resilient in stressed economic environments.
Source: S&P Global Ratings, as of 31 August 2025.
Past performance does not guarantee future results.
“Default rates for IG ABS have compared favorably to IG corporate credit since their inception. From the late 1990s through 2025, no AAA ABS has defaulted, while 2002 was the only year in which the AA tranche experienced a default. There has not been a single default in IG ABS since 2010. Even at the height of the Global Financial Crisis, ABS held up well despite severe stress in financial markets.”
-John Kerschner, Global Head of Securitized Products
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