U.S. consumers are more devoted to their mobile phones thantheir automobiles.

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The sea change has taken place over the last few years as mobiledevices become an integral tool not just for communication withloved ones or employers, but also everything from banking to datingto watching TV and listening to music. As cars grow relatively lessimportant, borrowers struggling to pay back their loans on time areincreasingly prioritizing payments on the latest iPhone instead ofmaking sure they hold on to their pickup or coupe.

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The shift is increasing the attractiveness of bonds generatedfrom mobile-phone loans, a small but growing portion of theasset-backed securities market. While just $7.7 billion of bondsbacked by phone purchases have been issued since 2016 — and all byVerizon Communications Inc. — the number may increase over comingyears.

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“Payment priority of cell phones is higher than personal andauto loans and similar to or slightly lower than that of mortgage,”Ram Ahluwalia, the chief executive officer of PeerIQ, a NewYork-based provider of data and analytics for the consumer lendingsector, said in an interview. “Now with Lyft and Uber, you canaccess transportation via cell phone. The car no longer is a central asset. Technological change isdriving shifts in consumer behavior.”

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There isn't much breakout data available for mobile-phone loansbecause it's a newer segment. But the above chart based on datafrom credit reporting agency TransUnion shows how the broadercategories have shifted over the last five years.

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“Back in 2008 cell phones probably weren't as present as theyare now and have moved up the scale,” said Ken Purnell, the head ofABS portfolio management at Invesco Advisers Inc., based inLouisville, Kentucky. “In the ABS market it gives investors anothervery high-quality type of security to invest in that didn't existtwo years ago.”

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While the market is set for growth, so far there have only beensix sales by Verizon, the largest U.S. mobile-phone carrier. Itsbonds are backed by customers' monthly device payments, which areusually bundled with their service bills. The spreads on thesecurities have tightened and are generally in line with prime autodebt.

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“Surveys are showing that the cell phone payment is a highpriority for the consumer, and from that perspective we think thatfundamentally they are pretty sound,” said Clayton Triick, anAtlanta-based portfolio manager at Angel Oak Capital Advisors,which manages $8.5 billion. ”More recently, spreads have justvalidated that.”

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Angel Oak sold its Verizon cell-phone bonds, but Triick said histeam would consider buying similar securities in the future ifthere is an attractive entry point, perhaps when new issuers cometo the market.

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While AT&T Inc. and others have done short-term financingthrough phone loans, full-blown ABS haven't yet materialized fromVerizon's smaller rivals. Purnell said mergers in the industry mayhave delayed the deals.

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“We thought the size of this type of financing would grow fasterthan it has,” Purnell said.

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