Vadim Verkhoglyad, CFA dv01
Welcome to another edition of the Asset Back podcast. I am your host, Andres Sundate. I am delighted to be joined today, by Vadim Verhoglod. I hope I said that right. And if I didn't, I'll get it right by the end.
Andres Sandate:But, Vadim has joined us from d v o one, and he is going to talk to us about the structured finance, market, which is a 15, $20,000,000,000,000 market. And we're gonna dive into a lot of the things that, that that that you do and talk about trends and, you know, the consumer. A little bit about his background, he's a vice president and head of research publication at d v o one. He's gonna talk again about structured finance, and what kind of investors need to be aware of. So we have a lot of ground to cover.
Andres Sandate:A little bit about d v o one, Vadim to start would be helpful. So with that, welcome to the asset backed podcast, and I'm gonna let you talk about your firm and a little bit about your background.
Vadim Verkhoglyad:Andres, thank thank you so much for having me. The d v l one is a data management platform, solution platform, and market intelligence platform for all things structured credit. We focus on anything that faces the consumer into some degree, whether that be mortgages, student loans, consumer unsecured auto, you name it. And Yep. We offer kind of investors and issuers the full service gamut, of really robust cutting edge tools for everything that they go through once they've made the loan to once the loan gets securitized.
Vadim Verkhoglyad:So unlike kind of the Bloomberg's or any indexes out there that are really made for the asset backed market, which I would think of as the very last stage in the pipeline once everything's ready to go, we have workflows that start much earlier than that from the initial loan buying to tape cracking to warehouse management, kind of everything in between. And because we have this robust dataset, we have portfolio data, we have platform data, We have things that don't make it to the securitized market, so we really have a good sense of what the overall trend is, not just what the the securitized self selected trend is. So we use that to create market intelligence, to talk about performance, to talk about cross sector trends. And in some ways, because we actually have daily data, we have real time information as well, which allowed us to publish the very first report, when COVID came out on consumer credit performance, and we beat everybody by about a month. So we had our report out.
Vadim Verkhoglyad:I think lockdown started May March 8, 2020. We had our report out March 21st.
Andres Sandate:Wow. Yeah. And and data seems to just be driving our world, these days. So we're gonna talk a lot about that. Yeah.
Andres Sandate:And and congrats, by the way. I I know, reading and researching for this conversation that that the company d v o one, has been growing very quickly, very rapidly, was named a couple of years ago. Maybe it's now been 3 years to the, one of the top 500 fastest growing companies in in in in thinking the Deloitte, technology list. And, and you're now, I know it's public, but you're now, is it a division or an entity of Fitch?
Vadim Verkhoglyad:We are owned by the same entity that owns Fitch. So we're we're part of Fitch Solutions.
Andres Sandate:Yes. Got it. Got it.
Vadim Verkhoglyad:We remain an independent company, kind of working with Fitch as a partner. Yeah. Not necessarily part of
Andres Sandate:Well, one of the one of the things that I wanted to to talk about first was was your background. You have a a very interesting background as a as a chartered financial analyst. You've you've spent 15, 16 years in the financial markets, but in a variety of capacities. I know you have a a lengthy track record, over 10 years at a at a big hedge fund. And, you know, now you're you're doing quite a bit.
Andres Sandate:You have your own podcast, so there's a lot of stuff I wanna talk about. But give us a little bit of your your background and kinda how you arrived to to to the role you're at at d b o one.
Vadim Verkhoglyad:Sure. So, I mean, I was fortunate enough to start Instructure Credit right right before the credit downturns or right before 2008. And I was very fortunate to land at a hedge fund that was sufficiently short the housing market that would, it was able to survive where a lot of structured credit funds did not, especially a lot of structured credit funds that had CEO managers, which ours did. And that was one of the very important things that I was looking for when I was interviewing. I was blessed to be able to learn just how how detailed, how much you can do in the structured credit markets, and how wide a variety it is.
Vadim Verkhoglyad:And, And, unfortunately, some of that variety and some of that, dynamism really went away in 2008, and in some ways has never come back. So the markets are very healthy. The markets are very strong, but there is something still quite missing from the amount of dynamism that existed before 2,007 and 8. Now whether that dynamism was all good, it certainly wasn't. It certainly led to some prevalence of behavior that wasn't well understood by all market participants.
Vadim Verkhoglyad:It led to a lot of losses. It led to, quite frankly, a financial crisis very much unlike anything we'd really seen in the modern world, because we haven't had a financial crisis in the age of data, in the age of kind of instant trade settlement and cross border flows. So the closest maybe was the Asian financial crisis of 97, 98, but that pales in comparison. This was so much more pronounced that, of course, it wasn't anything like the great depression in terms of unemployment and GDP decline, but it was so much more, I guess, spread across the world. And it was the impact was so globally felt that US mortgage bonds wound up, you know, tanking the Icelandic economy and Iceland's main three banks and German banks and Italian banks, and then Eastern European debt tanked Italian banks.
Vadim Verkhoglyad:So in some ways, this level of sophistication was what made it so complex. And since so so much of it started in the asset backed market, there was a lot of innovation that went into that. And there was a lot of because so much of that had to be unwound, and there were so many losses. There was so much kind of default. People just ran for the hills.
Vadim Verkhoglyad:They went from everybody wanted to be a part of this market and as much as possible, and it grew and it had more asset classes to nobody wanted to be part of it. So a lot of the innovation went away, but it behooved on the people that stayed to do the diligence, to do the credit work, to really understand the data behind mortgage performance, which at that point had been taken for granted. And since then I try to use that learning. And in fact, what I've tried to do since I've been at DV01 is to take the insights that I used in analyzing bonds. Like how would I personally select a bond portfolio?
Vadim Verkhoglyad:How would I select loan, good loans and apply that to creating market intelligence and creating our performance reports that we publish at DPL1?
Andres Sandate:Yeah. And, and, you know, there's a lot of great web site, material and research that that your firm puts out. So I would encourage listeners to to go on dv01, dot c0 and look at the resources and the research. And then as I mentioned, you also host a podcast, which I've had a chance to listen to called in the in the tranches of structured finance. I love the name.
Andres Sandate:So there's a lot of good good, content out there. And you mentioned you work with issuers and and and investors and and multiple market participants. So we're gonna talk about the health of the US consumer here, in a minute. But before we jump into that, you've been at the firm 5 years, and you talked about this dynamism that maybe existed pre 08. And, you know, when the GFC happened, a lot of, I would say, the the mainstream, main street kind of investors, probably didn't realize just how interconnected the global financial markets were and didn't realize, like you said, the the impact that mortgages in the US, residential mortgages, let's call it, would have on European banks and or German insurance companies.
Andres Sandate:You've been at the firm 5 years, and what really struck me about the the mission and the vision behind DV01 was was really to help prevent another GFC from taking place because you're able to really bring unparalleled transparency and intelligence to the structured products market. What was the decision, thought process to go 5 years ago to DV01, you know, from where you were on the, you know, the asset management side of the business?
Vadim Verkhoglyad:Absolutely. So to to the point that I was saying earlier, I felt like at some point, there was I I really wanted to broaden my asset class exposure, and I really wanted to kind of do something a little bit different. I you know, you can trade mortgage bonds for for a long time, and there's always something unique in in a bond one from the other, and there's something unique about every trade. But at some point, the process becomes a little bit repetitive. And this was in 2018, and the sector hadn't yet started to innovate with the kind of products that I think it's innovating with now.
Vadim Verkhoglyad:But really, it wasn't it it just wasn't bringing new products in the way that I thought was furthering my own intellectual curiosity. And when I write the Deviant, I realized just how big the opportunity was to as you kind of said, mainstream investors just weren't familiar with how much the, you know, the mortgage world had spread out. And in some ways, mainstream investors exiting this space is what got rid of that dynamism because at some point, you just had hedge funds trading or asset managers trading pre 2008 mortgage bonds with each other, on a cash basis, and that's it.
Andres Sandate:Yeah.
Vadim Verkhoglyad:Right? There wasn't there wasn't new products. There wasn't kind of new innovation in in lending. And in some ways, that innovation was going to other spaces, whether it was consumer unsecured, and kinda changing the business model there. Or today, it's the different types of home equity products that are getting made, or even the different Yeah.
Vadim Verkhoglyad:Edge mortgages that are getting made.
Andres Sandate:Mhmm.
Vadim Verkhoglyad:That's kind of the start of good innovation that really is at the heart of what structured credit can offer, because it does offer you a way. As an investor, it offers you a way to get in touch with the consumer that you can't otherwise. I always like to ask people when they say, oh, you know, I'm so critical of consumer credit and consumers take on too much debt and all all of these things that never hold up to data in inquiry. I always say, if that's how you feel, why don't you take a position against it? And then you quickly realize that's that it's not possible.
Vadim Verkhoglyad:Yeah. It is impossible to bet against the consumer if you want it to. It was possible for institutional investors pre 2008, but it's no longer possible. And that's some of the innovation and and the dynamism that that that's gone away. And one of the reasons it has gone away is because so many investors looked at the market and said, we didn't understand what we were buying.
Vadim Verkhoglyad:We didn't understand what the data looked like. How do we know what these pools were? How do we know historical precedents? And the answer to them was, well, you have to hire a quant. You have to, you know, find a firm that will host the data that will let you access it and query it quickly.
Vadim Verkhoglyad:And, again, this is the days before cloud compute. So, it was quite slow. You had to do all that, and you had to hire a person that knew how to filter through the data, knew how to create dynamic work on it, and then how to analyze it. And that just wasn't available in large quantities, and people didn't didn't use it. And you also have to read the complicated legal documents that nobody ever reads.
Vadim Verkhoglyad:Right. If nobody reads the terms and conditions of an Apple contract, just wait till you see a 500 page offering memorandum.
Andres Sandate:That's right.
Vadim Verkhoglyad:The priority of payment section and the reps and warranties and all that. And that work just wasn't done. And then when people lost money, they, in some ways said, you know, they kind of threw up their hands and said, okay, I'm done.
Andres Sandate:Yeah. When
Vadim Verkhoglyad:that happens when that happens with a large number of investors, you lose the need to innovate because you lose the need to pitch credit products to them. And now that some of the investors are coming back, some of that innovation is happening. Not all of it's coming back. We still don't have synthetic trading in in ABS like we used to. We still don't have indices except for commercial real estate that we used to.
Vadim Verkhoglyad:And those are things that are highly necessary because they bring transparency to the market. And as not even just from my seat at d v one, but just as a general, you know, practitioner in this space and as a follower and investor in this space, this is something we should all want because it gets more eyes on on the market. It gives other members a way to participate, which kind of grows the pie for everybody.
Andres Sandate:Yeah. Yeah. Brings brings transparency and liquidity. Well, one one thing that I really liked, like I said, when I was reviewing, kinda preparing some of the questions is, you know, the idea, and and sort of the genesis of the company was really born out of, of your founder's experience as a as a mortgage bond trader, a Bear Stearns, and the inability to get loan level data and transparency. And so it's like that that is often where innovation is born by that personal experience.
Andres Sandate:Right? And and now you're providing that. And I wanna sort sort of put some numbers around this for for perspective because I'm I'm you know, and these numbers are straight from your website. But but DBL 1 is providing information. Let's call it data, loan level data and market intelligence, consumer ABS, RMBS.
Andres Sandate:It's 9 is it 900 different securitizations? It's a $15,200,000
Vadim Verkhoglyad:Yeah. Well over a 1,000. Yep. And, and across 7 different markets across multiple countries. And the thing that we try to do is we try to we try to create a uniform work process.
Vadim Verkhoglyad:So if you're if you're used to work working in mortgages, and now somebody told you, hey, you wanna buy these consumer unsecured or these student loans, and you go, well, I don't know where to start. Well, start here. It's the same process. You're looking at the same graph. You're looking at the same performance.
Vadim Verkhoglyad:Everything is dynamic. It's it's all there so that you don't have to feel like in in our goal, you don't have to feel like you're behind the curve because somebody's built this workflow out that you haven't. And then you have to take 6 months to just get up the curve and get the courage to make your first investment. And so much of that is a technical process of getting the right, you know, the right access to data. And if we can do anything to eliminate that barrier and shrink down that process so more people can participate.
Vadim Verkhoglyad:Consume we consider ourselves to have done a great job.
Andres Sandate:Yeah. Yeah. I mean, with the with with the platform with 5 trillion of notional balance, a 100 and 20,000,000 loans, 900, now a 1000, you said, securitizations. There's clearly, a lot of data that's that's out there. And I think, you know, one thing that's really, emerged in the conversations I'm having on the podcast is how important and how critical things like transparency and data and access to the right, you know, software and, really partners from an enterprise scale if you're gonna play in these these markets is.
Vadim Verkhoglyad:Oh, yeah.
Andres Sandate:It's it's not just alpha. Right? It's it's not just having the investment capability. It's all you know, risk is important. Data is important.
Andres Sandate:Technology is important. It's great to see these companies like yours and others, whether you call yourselves Fintechs or not, like emerging to to step in to provide, the capabilities, you know, that these asset managers and originators want.
Vadim Verkhoglyad:That's exactly right. And you hit the nail on the head. Right? The question of alpha. Well, so alpha obviously comes from finding data sources and finding utility and getting more out of the data than the other people can perhaps see.
Vadim Verkhoglyad:And this is exactly what we what we try to do. So on top of the general data that we get from, you know, issuers and we get from servicers, we layer upon it, it our own kind of analysis and our own market intelligence that allow people to gain that same access. And again, as I said, some of it's taken taken straight out of the playbook that I used to use on the buy side or that other people here have experienced in in their investing career. So whether it's our non q m prepayment model, which we built kind of from scratch just for the non q m the only model like that that exists specifically focused on non q m. That's the same kind of alpha generation that you would that a fund manager would do when they were selecting securities, or a lot of our regional analysis where we do kind of county affordability ratios or ZIP code rankings, or our kind of the surprising analysis we did a couple years ago where we saw that loans that are located in counties or ZIP codes that are funded by renewable energy outperform in the mortgage market relative to everything else, even when you control for FICO, DTI, and LTV, which is crazy because even LTV doesn't outperform when controlled for FICO and DTI.
Vadim Verkhoglyad:So this is the way you generate alpha. It's in structured credit. It's through data.
Andres Sandate:It's through data.
Vadim Verkhoglyad:It's through data. And what we try to do is make that data equally accessible and available to everybody so that, hey, you can all use it if you need it.
Andres Sandate:Yeah. Fantastic. So that's our intro for folks listening. Covered a lot there in the first 15, 20 minutes, but I I wanna sort of pivot the conversation. I wanna talk about first, I wanna talk about the consumer.
Andres Sandate:You know, let's talk about the US consumer and their balance sheet. You know, we're recruiting recording this, pardon me, on May 16th. You know, today, there's been some this week, there's been some interesting headlines. Right? So just to sort of frame it up.
Andres Sandate:So the Dow crossed 40,000. You know, the April CPI, numbers came in. The market responded favorably. Yeah. They came in a little below expectations.
Andres Sandate:But there's also this, you know, sort of trifecta that I think the consumer potentially is starting to feel, and I'd love to get your reaction. And I know you're across a lot of different areas from student loans, mortgages, auto. But, you know, if you think about the cumulative effect of, you know, elevated prices with inflation, higher rates. Right? The environment that we're we've we've been experiencing and then just elevated debt levels.
Andres Sandate:And this kinda goes to you. You know, it what toll is that taking? So let's just let's let's just talk about the overall consumer balance sheet in the US. You know? Could could you just sort of help us understand, like, what you see?
Vadim Verkhoglyad:Yeah. Absolutely. So if I had to put a scale on it, I would say that the US consumer and US households, in some ways, have never lived down 2,008. They were hit with a massive shock in 2,008 that completely upended their balance sheets, upended their net worth, declined their home prices by a massive amount, and left them in dire straits from an unemployment from from a wealth perspective, from really a certainty of life perspective. And they spent the last part of 16 years rightsizing that balance sheet and kind of being really diligent with their capital.
Vadim Verkhoglyad:And that process, in some ways, despite top level headlines, that process only accelerated after COVID. So consumers have spent, consumers, for example, the debt to income ratio peaked for US consumers in 2008 at about a 134%, debt to g to income. That ratio came down to a 110% by 2019, actually a 105, and it's down to about 99 today. More importantly, what we've seen is since COVID, a lot of the gains and a lot of the more sustainable, financial behaviors actually happen at the lower incomes. We've seen significantly higher wealth growth at the lower income cohorts, across the board, not just real estate, certainly real estate is a big factor there, but they've the lower incomes have also seen income growth.
Vadim Verkhoglyad:They've seen wage growth. They've seen, value the value of their asset, their assets, their financial assets increase. And they've actually enhanced those gains by also limiting their access to credit. So for instance, we've been a lot of people talk about the fact that the credit card debt passed a $1,000,000,000,000, and this is a big headline. And the natural inclination is to extrapolate that to say that lower income consumers are being stretched.
Vadim Verkhoglyad:In fact, what we've observed is that since 2021, 2 thirds of all credit actually, since COVID, 2 thirds of all credit card debt in aggregate, or consumer debt as a whole, 2 thirds of consumer debt has been taken by the top 20% of income borrowers. So the 80 to 99 and then top 1%. On a per household basis, that 66% jumps to 85. Which is kind of which is kind of, which was astonishing trend. And Yeah.
Vadim Verkhoglyad:Some people will say, well, it's stimulus driven or it's this or it's that. But when you look no matter what time period you look at, if you wanna look from the Q2 of 2021 to today or from the Q2 of 22 or Q3, consumer credit growth among the bottom 60% of income cohorts is slower than it was from 2018 to 19 or from 2017 to 2019. And it wasn't very fast back then. It wasn't astonishingly fast back then, but it's slower today. Now their mortgage growth has been higher.
Vadim Verkhoglyad:Yep. But that's been offset by massive gains in asset prices. And the fact that they're taking on mortgage debt, it's not even a bad thing because they're not taking on risky debt. You aren't what's been interesting is even though as much as home prices have gone up, as much as interest rates have gone up, debt to income ratios are basically unchanged from 2019 levels on new mortgages on the average and on the kind of the worst, like the 90th percent risk profile, same for LTVs. So incomes are strong, fully, fully income documented, everything.
Vadim Verkhoglyad:So the consumer keeps focusing on their balance sheet. And if you look quite a bit more holistically at their expenses, according to the consumer survey consumer expectations, it's just the longest kind of survey that you've got, by the BLS. This is what they use to create the CPI, and that's a once a year, survey, so it's fantastic. If you look at that and you break it down into kind of essentials versus necessity spending, US households have spent the better part of 30 years shifting their expenses from discretionary to necessities. And nowhere is that more manifest than younger households.
Vadim Verkhoglyad:It's actually the youngest cohort that have done it the most. And that youngest cohort just so happens to also see some of the highest income growth, some of the highest wage growth, some of the highest homeownership growth until 2023. That's changed a little bit this year, but only minor, and that minor is recovering from really, really strong levels. So in this behavior, it's young people that are kind of doing the best in some in in some way, so to speak, which kind of flies in the face of popular narratives. But, ultimately, the data is what manifests, and that that's what the data is showing.
Andres Sandate:Yeah. Yeah. It it is. So let let's talk about let's let's dive into households. And, again, we're gonna we're gonna focus in the US.
Andres Sandate:I'd love to you guys are seeing this because you're getting, you know, data, and and, you know, with with a 1,000 securitizations and the 5,000,000,000,000 in notional. You you have the data to be able to to to to opine on this. But could you just highlight you know, you you talked about it geographically. I know you guys can do stuff on a county by county basis. Regionally, you can look at certain parts of the country.
Andres Sandate:You can look at things like prepayments and modifications. Yeah. Help, educate us about, like, households around some of those different, dynamics and and what, you know, what's the data telling you?
Vadim Verkhoglyad:You know, it's interesting you mentioned that because one trend, we we've generally been positive US consumers in d v o one for a number of years, and I've personally been positive US consumers really since 2009. The one trend that is recently emerging, oh, and this has really manifested over the past 9 months or so, is just how much the increase in insurance costs are starting to eat into household balance sheet. Because I think I I often think that insurance is the forgotten 4th portion of, mortgage pay of the household payment. And forgotten because for a long time, it was just a sleepy payment that nobody paid attention to. What's interesting is of all the 4 categories, the principal, the interest, the tax, and the insurance, insurance is the only one of those payments that hits existing homeowners worse than new buyers.
Vadim Verkhoglyad:Because if you're a new buyer, you're qualifying based on today's insurance rates. So everything that's gone on with climate change, with, natural disasters and all that, that's being priced in. And you know this when you're buying a house. So if you thought your insurance premium would be 1,000 a month and it's gonna be 25100, you're not buying the house. Mhmm.
Vadim Verkhoglyad:Right? You're buying a different house. You have to.
Andres Sandate:Yeah.
Vadim Verkhoglyad:But if you're an existing homeowner, you don't have an option. You don't get to say, oh, I'm not paying it. Well, if you're not paying it, you don't get insurance. And what's been crazy is just how much those premiums have risen. And more importantly than the aggregate is how they've risen in certain areas.
Vadim Verkhoglyad:The quintessential example of all of this boils down to the state of Florida. Sure. No area is getting hit by this more than the state of Florida. And as manifest to this, the performance in Florida over the past year is arguably worse than any other state in the country. I'll tell you from trends.
Vadim Verkhoglyad:In the consumer unsecured space, which is one of our largest universe, Florida had the lowest what we call impairment rate, which is the percentage of all consumer unsecured loans where the borrower is not making their full payment. Whether they're delinquent or they're on a modification, what's your nonpayment? As recently as the spring of 2023, Florida had the lowest of all major regions. So not every state, because some states just don't have enough loans. But of all the major regions that we've classified, Florida had the lowest impairment rate.
Vadim Verkhoglyad:Today, it's got the 2nd highest.
Andres Sandate:Wow.
Vadim Verkhoglyad:Yeah. Now you could say this is just on consumer unsecured. But when you look at the TransUnion data, right, where they publish data across and and they do it by sector across the aggregate, Florida's growth in bank card delinquency rate is more than double the national average. It's the 2nd highest state in the country. Auto loans, subprime auto, same thing.
Vadim Verkhoglyad:And the measure that we really like, which is to look at, new delinquencies adding back in default or charge offs. Again, Florida, worst in the nation over the past worst in the nation of major region of the over the past year. Why? What's going on? Florida's economy is generally doing well.
Vadim Verkhoglyad:Everybody's Yeah. Miami home prices. Insurance. Because Florida insurance rates have by according to the Institute of Ins the III, which the Institute of Insurance Investors, Florida homeowner insurance premiums have tripled over the past 4 years.
Andres Sandate:Wow. Yeah. So that's that yeah. It's it's having, like you said, it's having a a big impact.
Vadim Verkhoglyad:But but let's let's Number just just to paint some numbers on it because this this would boggle boggled my mind. If you compare the amount of home that the homeowner's insurance premium has gone up in Florida, It's the equivalent of taking Florida from a no state income tax to an 8% state income tax day.
Andres Sandate:You don't hear that a lot.
Vadim Verkhoglyad:That's because it because it's hard to imagine numbers when people say triple and all that. That's the equivalent, except that you're not getting the tax write off. You're not getting, you know Yeah. Whatever else goes into state income tax. The Florida's property tax is some of the highest in the nation, but that's how much the premiums have gone up, and it's not like they're gonna shrink.
Andres Sandate:No. Yeah. I I can't think of the last time somebody sent me a a a a an insurance bill and said, oh, your rate went down. It just yeah. It doesn't happen.
Andres Sandate:So so that's really interesting. Anything else that you could talk about from a household's perspective that, when looking at the data and providing research and, you know, writing and putting content out that, Florida's a fantastic example, and it's quite interesting. Are there other whether it's, around modifications or delinquencies or DTI, or it's a specific asset class, maybe student loans or just other areas that, are are important to the structured finance marketplace, but even just writ large, you know, people that are asset backed investors or asset based investors.
Vadim Verkhoglyad:Absolutely. I think what's important to keep in mind to people is that we in financial markets, we like to think quarter to quarter for equity investors, month to month for structured credit investors. But that's how we think about updating our portfolios. When we think about the way that we make decisions or the way that we come about our investment process, That's formed over the course of years. Like, it's it's our investment philosophy.
Vadim Verkhoglyad:We form it over experience. We we we we we do all of this. It we don't change our thinking entirely on a dime. The way that we approach investing, we build it over decades. And this idea of like decision making as a rapid process where people rapidly respond, it just doesn't happen.
Vadim Verkhoglyad:This is the reason why you typically see credit cycles take a long time. Consider that the previous credit cycle, end to end, you started seeing credit loosening in 1999, maybe? And you in 2000, really after the kind of Asian financial crisis, and you saw it loosen for 8, 9 years until 28, 2008. And then it contracted for 6, 7 years. Typically, credit cycles, they last a decade or more.
Vadim Verkhoglyad:We had an end to end credit cycle in two and a half years. Mhmm. We had really decent credit in 2019, completely shut off credit in 2020 because of COVID, record some not not record low, not 2,005, 2006, but, like, really significantly open credit markets in 2021 and closed again in 2022. That's a really fast time for that to happen. That's faster than companies and individuals make wholesale decisions about their balance sheet.
Vadim Verkhoglyad:They can pick on a loan that doesn't that's not wholesale thinking about your balance sheet. But people don't think that quickly. So when that happens, you have a situation where both investors and issuers and borrowers, some segment of it, whether it's 5%, 10%, 15, that shouldn't have taken a loan or that loan shouldn't have been made. And it just so happens that those 15% of loans, that tail has been wagging the dog in terms of performance over the past kind of couple of years. The way we manifest that.
Vadim Verkhoglyad:Consumer unsecured, the MPL sector, has had its kind of worst 2 years in the sector's history. And sector's not very old, so, you know, that doesn't say a lot, but it has had a terrible 22 and 23 from correct performance. But when you subsegment that, the top end, the what they call the top grades, what we call top grades, that's our own classification that we offer to all investors, makes up about 60% of their the overall issuance up to 70 percent in 20, 23. It's performed fine. It's basically back to pre COVID levels, had record performance, of course, in 2021.
Vadim Verkhoglyad:And when you adjust for the higher interest rates, the ROIs are great. The ROIs are pretty close to record highs for the early 23 production. You look at the bottom grades, it's just 5% of origination, they fell off a cliff. Yeah. They, the the ROIs went negative.
Vadim Verkhoglyad:Or they're they haven't went negative yet, but they're gonna go negative. That's pretty telling. And looking at that broader, right, because we'd like to take in as much data as we can. When you look at TransUnion data, for example, they look at aggregate credit cards, and they say, hey, aggregate credit card rates, the delinquency rates are up like 1% or 1.5% on a year over year basis. The top 70% of that universe, prime, super prime, and basically everything above near prime, that's 70% origination, the delinquencies haven't changed.
Vadim Verkhoglyad:Yep. Except for interrupt a huge amount. But subprime is 10%. So you have the tail wagging the dog very much. That's not unexpected behavior, when you have kind of a risk on environment that you had in 2021.
Vadim Verkhoglyad:So what's happened is we've had a rapid credit cycle that's coupled with what I would say is a detachment from willingness to pay. Because you've had inflation, because you've had so much economic uncertainty around prices, around household prices, especially, you know, gas prices, car prices, home prices, these are things that hit consumers right in the balance sheet and in the pocketbook very, very hard. So if you were on the edge and you're seeing this inflation and you're seeing the headlines, you know, in mass media around inflation, you're gonna really think about what you're paying. And you're probably you may not be paying that credit card. You may not be paying that, that unsecured loan.
Vadim Verkhoglyad:And when you have a significant amount of borrowers that, you know sorry. When you have significant behavior in that 10 or 15%, it's enough to move up the aggregate. So everybody writes about the aggregate, and they say, this is what's happening. Things are getting bad. Things are not getting bad.
Vadim Verkhoglyad:The things are getting really bad for the worst borrowers.
Andres Sandate:All the more reason why with a I think what I would encapsulate what you just said, a rapid credit cycle with 2 years.
Vadim Verkhoglyad:Yeah.
Andres Sandate:Like, this 21, 22, contrast that with 8, 9 year cycles prior to, and going back in time. Yeah. That's why I would presume, not put words in your mouth, but if I'm if if I'm a an issuer, if I'm a a lender, if I'm a, or a borrower, if I'm an investor in the structured finance space, I have to have real time broad data in order to make decisions. Right? Because like you said, there's so many subtleties between the different, not only the asset classes, but geographies.
Andres Sandate:But there's so there's so many variables. And and I think, you you you illuminated that. So it's it's really fascinating. I wanna talk about, you know, I I wanna talk a little bit about, the the the student loan, the student loan market. Because I think as we head into November, and we've seen a lot of headlines about student loans and and loan forgiveness.
Andres Sandate:And we're not gonna get into politics of it, but I'm just curious. You talk a lot about that in in the research, and I'm I'm just this isn't the biggest market, but it is it it gets a lot of headlines. It is important. I wanna ask you a little bit about the student loan and and maybe just more broadly, like, the consumer. You talked about credit cards, but the, you you take out the mortgage, you take out the the auto, like, give us a feel for sort of those two areas.
Andres Sandate:Absolutely. What the data is showing.
Vadim Verkhoglyad:And and, you know, it's great you're asking because we actually have a research piece coming out next week that dives very deeply into student loan behavior since to since the Q3 of 2023.
Andres Sandate:Yeah. Because if you talk about what you what you just said is, like, the expectation that they're not gonna have to pay it back. Like, I just I I'm seeing that, like, not firsthand personally. I paid my student loans back, but, like, again, we're not gonna get into politics, but I just the behavior and the psychology of the consumer Yeah. It just feels different.
Vadim Verkhoglyad:Oh, yeah. So, I mean, if you remember, there was a lot of headlines that were coming out that, like, aggregate credit performance has been separate because people have to pay back their loans. Mhmm. And that was a real concern. You know, you had people not paying for 3 years.
Vadim Verkhoglyad:Right? Yeah. Now if there's interest accrual that's going into that, they've, again, they've made financial decisions for their life based on their payments, and their payments didn't include student loan payments. So what we observed, and there's actually a great dataset for aggregate, not loan level information. That's not available for the federal portfolio, but there's a great dataset that the student aid office offers, for anybody that tracks.
Vadim Verkhoglyad:And it's based on their collections data, so it's not sample based. It's not, you know, in in it's not survey based. This is this is the collected data. And what they've shown is that you've set had delinquency rates increase, but delinquency rates have kind of increased back to not quite pre COVID levels, not as good, but maybe to 2016, 2017 levels. And you've had the re you've had repayment behavior.
Vadim Verkhoglyad:You've had borrowers start to repay. So you're not quite falling off a cliff when you think about the student loan debt market, but more importantly, if the, the view is that you have to pay student debt, because it's not dischargeable in bankruptcy and, you know, it's a long process, Does that manifest in other segments? Well, just so happened that in consumer unsecured, which had really bad 22 and 23, like performance was just constantly getting worse. It actually had its some of its best performance since the Q4 of 2023. So pre behavior is improving.
Vadim Verkhoglyad:Not when we say improving, we say improving on a seasonally adjusted basis. There is a lot of seasonality to credit performance that people who aren't spending time in the markets don't really realize that you can write a lot of media headlines around credit performance in the Q4, because it's generally bad because that's when holiday shopping season happens. That's when, you know, and that's when a lot of, a lot of near prime lenders do most of their business is that time because people need money for holiday shopping. They need money to advance that car or, you know, whatever. So you can write a lot of media headlines in.
Vadim Verkhoglyad:You you can't write them in the Q1 because it got to when credit performance improves. It just doesn't generate a lot a lot of headlines. So when we say the best performance is seasonally adjusted. So on a seasonally adjusted basis, we've seen performance really start to improve across the board. That's a combination of things.
Vadim Verkhoglyad:That's a combination tighter credit or underwriting. No question. But that's also a combination of the worst, the worst of the worst, the worst of the borrowers that were gonna default. A lot of them have done so. And we're starting to see kind of that, that tail end of it not be nearly as bad.
Vadim Verkhoglyad:And I think the most important thing to keep in mind when we when we think under it's about the consumer balance sheet, 70% of it's mortgages. 70% of the consumer debt is mortgage. If we add home equity to that mortgage, it's getting closer to 75. Mortgage mortgages set record below delinquency rates. All time record lows.
Vadim Verkhoglyad:Twice in 2023 and pretty close to record low in March 2024.
Andres Sandate:Wow.
Vadim Verkhoglyad:Yeah. That's that's pretty selling. So we know what the consumer's cry consumer balance sheet priority is.
Andres Sandate:Yeah.
Vadim Verkhoglyad:Auto performance also good. In the prime sector, it's fine. It continues to be great. In deep subprime, it's not great. No question about it.
Vadim Verkhoglyad:But that's, again, that's that tail wagging the dog question.
Andres Sandate:That's right.
Vadim Verkhoglyad:That's that's, of course, loans bringing up the aggregate. So in aggregate, the consumer overall, if you wanted to bet on the US consumer overall, and you'd say, bet the house, bet the farm, go at it all day, but be very diligent about that that underwriting so that you're not catching the tail loans.
Andres Sandate:Yeah. Yeah. So so that's a great segue. Let's talk a little bit about origination, And let's just see, you know, let's just kind of see where this goes. So, you know, credit underwriting has tightened.
Andres Sandate:We we've seen that. And, you know, you could look at a lot of different, areas where where we've seen that take place. But but there's no doubt the origination volume is just is just down. So give me give me, and our audience, like, a sense for just origination trends, across these different areas, from from auto, mortgage, consumer, unsecured, student loans, etcetera?
Vadim Verkhoglyad:Sure. Starting with the easiest one, consumer unsecured, because that's the one that you can see the credit tightening kinda ratchet the most dramatically. And because that doesn't have collateral backing it, that's really where the credit tightening loosening manifests very quickly. Volumes are substantially lower than they were. So the record for that sector is early 2022 and volumes are off quite substantially, close to 50% off those levels.
Vadim Verkhoglyad:Now that's picked up a little bit, a minor amount in 20 24, some of that rebounding because it had a very, very rough q3, q4 of 2024. A lot of that decline has been credit tightening. We can't say how much definitively, but half is not outside the realm of possibility of that decline as issuers voluntarily tightening their their credit box. Could be more than half, could be less than half, but that's not an unreasonable statement to look at it from that perspective. The auto lenders have talked about tightening their standards for quite a bit of time.
Vadim Verkhoglyad:And you've seen that in experience on the state of the auto report. We've seen that in the Federal Reserve Consumer Report. Auto lending growth has slowed down substantially in terms of dollar balance. And that's coming in the fact despite the fact that auto prices have risen. So auto prices are up much more than incomes over the past 2 years.
Vadim Verkhoglyad:For used auto, that kinda stopped in 2023. But even if you look at the quantity, you know, the total, it's still substantially higher than, you know, income growth maybe since 2019. And new cars even more so, but the volume of auto loans hasn't tightening. Mortgages, the question with mortgages is always about rates. Mortgages is pretty simple.
Vadim Verkhoglyad:When you have lower rates, you have lots of volume. When you have higher rates, you have no volume. 61% of American homes are owned in cash. 80 so close to 80% of mortgages are locked in at fixed rates of 4% or below. So, yeah, that's where you're getting, you know, where are you getting volume.
Vadim Verkhoglyad:So there's actually something that we covered or we're gonna cover in an upcoming piece, which is to say, hey. You know, how does this manifest in home sales? And we kinda cover in detail our view about how the effect of, like, moving buyers is versus home first time buyers versus new mortgage takers, and how much is all that manifest. And the truth is a lot of people that own their homes are just not going to list them.
Andres Sandate:No. Yeah.
Vadim Verkhoglyad:Housing is in in critically short supply in America. And there's a lot of implications to that when it comes to the mortgage lending, the underwriting, kind of in everything in between. But we know the mortgage underwriting is strong because, again, record lows. We're talking, you know, these are legitimately record lows. And we never saw, despite the fact that I mean, people talk about record home equity today, everybody figures we hit record home equity in 2017 and every year since then, and we've just been piling on top of that record.
Vadim Verkhoglyad:And so, and ironically enough, since 2017, the percentage of cash that's been extracted from home equity values actually dropped every single year. So there is home equity lending happening. It's just happening against the backdrop of trillions of home equity available. You know, and, and the interesting thing is we've had a really significant trend of the past 2 years because for the first time since 2,006, 2007, we've seen home equity lending emerge from outside of just big bank balance sheets lending to their existing clients to something that investors can get in front of. Mhmm.
Vadim Verkhoglyad:Something that is accessible to investors. And I think that's very important because it unlocks the ability, not necessarily makes them do it, but it unlocks the ability for people who aren't, you know, don't have a $200,000 checking account at JPMorgan, who have a personal relationship with the banker that's gonna offer them a prime minus 25 basis point loan, which was the staple of home equity lending after 2008, to something that is a little bit more broad based, especially with products like home equity inclusion, which isn't a loan, but it's a kind of a shared appreciation process. It gives people the availability of that kind of credit. Maybe it's to refinance credit cards, which have seen APR growth that is quite frankly astounding over the past two and a half years, or the past 2 years to be exact, it gives them a little bit more optionality. Yeah.
Vadim Verkhoglyad:Based on the trends, we're not seeing we're not seeing that they're gonna uptake it all that much. We'll see 1,000,000,000 of lending against tens of trillions of home equity. So it's still gonna be a drop in the bucket, but this it's important because it's more and more dynamism in the sector. And it draws more and more attention to the sector, which gives us the ability to introduce new products and new lending types and new security types, which again, kind of grows the pipe for everybody.
Andres Sandate:Yeah. I mean, it's another lever for the consumer to to potentially pull. Hopefully, they're educated and informed and etcetera. But but it's it's is is kinda goes back to that point on on dynamism that you talked about. I wanna shift gears and talk about, demographics.
Andres Sandate:Gen z. You talked about young younger, younger consumers. So let's start with with them and the the debt management, if that's the right word, like, how that type of household or that demographic, if if we start there, how was that mindset, how how's the data proving out, like, different than say, you know, gen x, y, and and other generations?
Vadim Verkhoglyad:Gen z got a harsh economic reality from the absolute decimation of balance sheets that millennials experience coming out of college. Millennials were absolutely crushed by the 2008 financial crisis, worse than any other generation by a metric mile. They lost some of their best income earning potential because of the kind of 3 or 4 or 5 lost years of wage growth, from 2,008 to 2012, 2013. They got ratcheted with record student loan debt because a lot of them had to ride out the crisis by upskilling, in in undergraduate, but really especially in graduate degrees. And unfortunately, some of those borrowers went to for profit institutions that wholesale, they failed them.
Vadim Verkhoglyad:They lost access to homeownership. They lost access to economic opportunity, and they really had a tough time for a number of years. We started to see the millennial balance sheets come back over the past few years, but this is mostly repairing the damage that's been done. Some of the time some of that will take years to to unwind. It's why you still have such low homeownership rates for people above age 20, like maybe 28, 29 to the early forties.
Vadim Verkhoglyad:You have a depressed rate of homeownership. You have an elevated rate of people living at home, etcetera. That, that with a, with a social media landscape and the media landscape that we have today is a lesson that Gen Z took very, very much to heart. And we see that in a number of ways. Gen Z made a wholesale transition starting at age 18 to their decisions in college, to their decisions out of college, to their decisions about asset ownership.
Vadim Verkhoglyad:Starting in college, they made a wholesale shift into what degrees they take. We've seen a massive uptake over the past 10 years in degrees that I would call earning degrees.
Andres Sandate:Yeah.
Vadim Verkhoglyad:For just degrees that from a financial perspective, pay more money. We've seen massive uptake in medical degrees and engineering degrees and computer systems degrees, offset by a massive decline in liberal arts degrees and unfortunately education degrees as well. That started that's in college. They also made a concerted effort to take on less student debt. We saw student debt levels peak at on an inflation adjusted basis, they peaked in 2012.
Vadim Verkhoglyad:And and this was kind of a recovery from 2,007. They peaked really in 2,007, and they peaked again in 2012, but that was mostly graduate school debt. Since then, they've come down quite substantially, and nowhere has that happened more than in undergraduate debt. That's come down for younger borrowers by anywhere from 5% to as much as 40%, depending on the data source that you use. So they took on much less student loan, the student loan debt.
Vadim Verkhoglyad:They also went to trade schools quite a bit more. We saw trade school and apprenticeship, growth of about 60, 70%, or in some cases, doubled from 2013 levels in aggregate. Despite the fact that gen z is a smaller cohort than millennials on an age basis. They started the work so they they took on less debt. They they got higher paid degrees.
Vadim Verkhoglyad:They mostly didn't go to 2 year institutions. They went to 4 year colleges. So you see, there a lot of people talk about an overall decline in enrollment. If you look at enrollment in public or private 4 year institutions, it's grown massively since 2010. The decline has been in for profit institutions and 2 year schools.
Vadim Verkhoglyad:So they got higher paid degrees. Then when they come out of college, they have much higher job earnings. Their income grows substantially. And what they did with that income is they bought homes. So despite all of the rhetoric, despite all of the things that people talk about, homeownership rates among households under the age of 25 was at record highs from 2020 to 2023.
Vadim Verkhoglyad:2022, sorry. It fell in 2023, but that's actually more to do with household formation, than necessarily kind of a wholesale step away from home buying. So record incomes, low levels debt, they took on the lessons of the global financial crisis that Gen Z had to learn the hard way. Sorry, that millennials Gen Z.
Andres Sandate:Millennials. Yeah.
Vadim Verkhoglyad:Millennials learned it the hard way. Gen Z saw the impact from millennials on social media and said, Hey, not me. Me.
Andres Sandate:Not gonna go down the path. Well, fascinating. So that's so there's a ton of good data there. There's a lot of interesting and powerful insights and certainly things that, that that I would imagine your your clients, can factor in. 2 final areas that I wanna hit on before we wrap up.
Andres Sandate:I wanna talk about just consumer ABS, more broadly and just your views on this space in 2024.
Vadim Verkhoglyad:Yeah, I think 2024 is poised to be a very, very strong year in consumer ABS. And, honestly, looking beyond 2024 looks equally kind of robust. The reason being that when consumer ABS or what the ABS markets typically have really down years, it usually exposes a lot of bad lenders, a lot of kind of negative behavior. It kind of creates a negative spiral in and of itself. What we didn't see over the past few years, despite the volume declines, despite the spreads that they faced, was any massive wholesale collapse in existing lenders because of bad practices.
Vadim Verkhoglyad:It's not to say that no one collapsed. We certainly saw some bad Sunpro Auto lenders collapse, which you could argue is a very good thing because of the risk that they took in 2021, but the sectors themselves remained robust. ABS volumes declined in 22 23 in large cases because issuers are with good balance sheets just said, hey. We have warehouses. We have strong balance sheets.
Vadim Verkhoglyad:We don't have to engage here. We're going to engage with our investor base and with our own balance sheet in the ways that we deem sufficient until markets recover, and markets did recover. So we saw massive volume declines in 22 and 23, which gave investors some comfort that, hey. You know, my my returns aren't gonna collapse entirely. And in some ways, the issuers are far more aligned to me today than they have been, especially, you know, harking back to the o eight days.
Vadim Verkhoglyad:We've got a lot of people that are in the space today were also in the space in o eight, and they remember those lessons very, very well. So what's happened is now with some of the future rate paths, I guess, a little bit less uncertain than maybe the fears that that existed in late 22 and parts of 2023, coupled with the aforementioned decline in ABS kind of pricing, coupled with maybe people not fearing that inflation can't be tamed has brought in a lot of kind of interest to the markets, especially as people realize that performance didn't kind of fall off when they look at the top 80% of loans. And when that kind of happens, there's a natural inclination to say, hey, I can get my hands around this data. I can get my I can get a good understanding of what losses are gonna look like. I can have a decent, you know, perspective on my credit performance, and I'm willing to pay for that risk.
Vadim Verkhoglyad:So in some ways, the rebounds that we saw in the equity markets have manifest in consumer ABS, maybe a little bit later than it did there. But for most of 2024, it's continued to be very, very strong, and there's no good signal showing why that would stop.
Andres Sandate:Yeah. Into 25. Yeah. The the last the last question I want to ask you, we've covered so much good ground. But but one of the areas that I know that you guys spend a lot of time on is the is the is the is the auto space.
Andres Sandate:And I had a I had a show on recently with a with a group that, supports, issuers and originators on the on the auto side. So this kind of is a is a question to follow-up on that one. Yeah. And that is, you know, there's a lot of talk. There's a lot of speculation, particularly in the media that there's a bubble forming in the subprime auto space and that that, you know, there's there's gonna be some pain there.
Andres Sandate:Yeah. And it's the next, you know, potential, you know, crisis credit crisis. Yeah. But but also that probably has some unintended consequences, I'm thinking, in that in that narrative. So what what are you seeing?
Andres Sandate:What is the data? Fairly specific question, but I think a good one for us to wrap up on.
Vadim Verkhoglyad:No. I think I think it's a great one. The great thing about having a little bit of historical perspective is that this is the exact thing there that the people were talking about in 2019 when they all said that subprime auto would be the next crisis. And right before 2019 was 2015. And everybody swore up and down.
Vadim Verkhoglyad:In 2015, it's when Santander had to sell off their LendingClub or their various consumer unsecured loans, and subprime auto performance wasn't doing very well, and everybody swore that this was gonna be the next 08. And then in 2019, again, when performance got a little bit bad, they also just had the same thing. Subprime auto is an asset class that gets so much bad rep because of the term subprime. Because 2,008 still lives in people's minds. In some cases, people think that 2,008 was last week, and they don't think it's 16 years ago, which is what they should think.
Vadim Verkhoglyad:So subprime auto is the most quintessential example of the tail wagging the dog because you had a few lenders engage in such bad lending practices that they had no choice but to collapse. The UATs of the world had no choice because their performance was just unsustainable. But as for every lender like that that exists, there are 3, 4, 5 lenders everywhere on the subprime stack that are in this business for the long haul. They're not they view the ABS market as a fundamental part of their business of operations. Now it's not to say that they didn't make bad loans in 21 22.
Vadim Verkhoglyad:They certainly did. We saw a kind of under credit underperformance across shelves in that year. But we also saw it as we saw the same issuers step into those deals to provide credit support, whether that was decreasing their servicing fees or committing capital to top up ex excess spread, or making sure that even the lowest rated classes always had their OC support because they all needed that market. They recognize the importance of it. They recognize the value that it brings to the business long term and they stepped in and we've started to see, what what we really saw in in that segment is that for the bigger issuers in subprime auto and the generic issuers, their performance went back to 2019 levels.
Vadim Verkhoglyad:2019 is not a great year in subprime auto, but it's nothing that's going to collapse the sector. For the worst issuers, it fell off. But those worst issuers collapsed. Their servicing went to steadier hands, and they managed to kind of correct over time. Subprime auto is not neither big enough nor in poor enough hands to create the next credit crisis.
Vadim Verkhoglyad:There it'll create the next credit crisis at 3 or 4 bad issuers. The credit acceptance corpse in the world, the UATs of the world, they had to deal with the things that they had to do. Other than that, it's just not that big. The whole entire auto universe, we're talking about a couple $100,000,000,000 Consumers have $17,000,000,000,000 of debt. And this idea that this 300, this 2, 300,000,000,000 over here is going to collapse all of it.
Vadim Verkhoglyad:Just it always it it makes for a good story. It certainly makes for for decent media coverage, but in terms of actual efficacy, it's really not there. And when you read a more comprehensive auto report, like, for example, the Experian, report that I mentioned earlier, What it's showing is that a lot of the reason that that separate model auto bubble not bubble, why that some of those worst lenders were able to do what they were doing is because traditional auto lenders took a big step back in parts of 21 2022 by tightening their standards, by raising overall APRs, by capping the amount that they're lending the balance, despite the fact that auto prices were going up as part of credit tightening. And a lot of that manifested in good performance in 2023. Whether they loosen the books completely in 24 is unknown, but there is certainly the capacity for them to do so given the fact that used auto prices have fallen, that incomes are still strong on a real basis and on a nominal basis.
Vadim Verkhoglyad:And the fact that you've seen existing issuers step in to support their own platforms, coupled with, of course, spread tightening.
Andres Sandate:Yeah. Yeah. Well, when you have a 15, $20,000,000,000,000 market in structured finance and growing and and, you know, we the reality is is this is what is power and what powers, you know, the economy in the US. I mean, consumer, auto, residential mortgages, etcetera. And it's, you know, it's one of the the the reasons why I thought the podcast was so important to put out there.
Andres Sandate:And I'm sure, you know, you you find that the the opportunity to write research and publish constantly changing just because of the the massive not only size of the market, but also just the dynamism, you know, to use a word that that you brought up earlier. We're gonna leave it there for today. I I I think there's a lot more that we could cover in in a future conversation. I'd love I'd love to have you back on, Vadim. But, but I thought we we covered a lot of good ground, and, I really do appreciate, you.
Andres Sandate:So for my guests, how can they engage with you and d v o one? What's the best way for them to to follow your work and to follow the research that you're putting out?
Vadim Verkhoglyad:Absolutely. And Andres, thank you so much for having me on. It's been a pleasure. It's been a great conversation. All of our research fortunately is free of charge that anybody can access.
Vadim Verkhoglyad:Just go to dv01dash.co and click on the research section there. That's all accessible, our data and platform, all of that. The reason we designed it to be accessible to investors is because it is. You can reach out to our sales team, sales@dvoone.co. Our web app, our product is designed to be for investors.
Vadim Verkhoglyad:In a lot of cases, we do have kind of free subscriptions for a lot of products that we that we do have. So we have our research that's always free of charge. Our podcasts are always free of charge. And our general offering in many cases for certain investors is free of charge. So just reach out to our sales team, sales@c@dvoone.co, and, let us know how we can help you.
Andres Sandate:Yeah. Fantastic. Well, Vadim Verhoeglaan, VP, head of research publication at dbo 1, A very interesting conversation today. I want to thank you for joining me on the Asset Backed podcast, and I look forward to having you back in the near future.
Vadim Verkhoglyad:I would love to come back as soon as you'll have me.
Andres Sandate:Take care and have a great afternoon.
Vadim Verkhoglyad:Take care. Bye bye.
Andres Sandate:Bye bye.
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