Fitch: 2 Factors Impact Auto ABS Improvement During Past 3 Months
May 29, 2013
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NEW YORK — Fitch Ratings noticed losses declined for its
prime and subprime auto loan ABS indices for the third consecutive month.
Analysts found the drops coincided with three consecutive monthly declines in the U.S. unemployment rate and lower jobless claims.
"If these trends continue and U.S. consumers remain resolute in their auto loan payments, we would expect a positive impact on all our indices," said Hylton Heard, Fitch's senior director of U.S. structured finance and asset-backed securities.
Fitch's prime 60-day delinquency index dropped to 0.29 percent in April, down 12 percent month-over-month. The rate was also 12 percent lower year-over-year.
Analysts also determined prime annualized net losses sank 27 percent from March as April's reading settled at 0.24 percent. They pointed out annualized net losses were 40 percent higher than the 0.14 percent reading posted a year earlier, which was a record low,
"But performance is still strong," Heard said.
Furthermore, prime cumulative net losses came in at 0.29 percent, according to Fitch, marking a 3-percent drop month-over-month and almost 30 decrease year-over-year.
Turning over to the subprime sector, Fitch indicated subprime 60-day delinquencies dropped for a third consecutive month in April to 2.68 percent. That level was 11 percent lower than March's reading, but 15 percent higher than the same month last year.
Analysts added that subprime annualized net losses ended April at 4.1 percent, a 12-percent drop from March and 1 percent below April of last year.
"Robust credit underwriting standards in the 2009-2012 vintages, combined with healthy wholesale vehicle market over the past two years, have supported prime asset performance," Heard said.
However, some softening in the wholesale vehicle market has begun, as Fitch expected, with increased supply in the market in 2013," he continued.
"Fitch expects loss rates to increase in 2013, albeit only marginally from current levels, with no material impact on asset performance," Heard went on to say.
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