Fitch: U.S. Subprime Auto ABS Losses Climb to Four-Year High
18 December 2014 - 2:23PM
Business Wire
Losses were up for both U.S. prime and subprime auto loan ABS
last month, with the latter reaching levels not seen since
early-2010, according to the latest monthly index results from
Fitch Ratings.
Subprime auto loan ABS losses climbed 4.6% in November. In the
prime sector, annualized net losses (ANL) also crept up last month,
though they remain low on a historical basis entering 2015.
Subprime ANL climbed to 7.96% in November to the highest level
in over four years. ANL were 16.5% above the rate recorded in
November 2013. Despite rising loss rates during the latter half of
this year, subprime transactions are still performing within
initial loss expectations. From a vintage standpoint, 2013 subprime
auto loans are tracking slightly above 2012. That said, Fitch still
forecasts loss levels for both vintages are still to finish below
that of the weak 2006-2008 vintages.
Prime ANL rose to 0.47% from 0.40% in October. Even though this
was a double-digit percentage increase, loss rates are still low
historically entering the December holidays. The highest rate
recorded in 2014 was back in February at 0.49%, so performance is
stable going into 2015.
Prime auto loan ABS 60+ day delinquencies dipped nearly 6% in
November month-over-month (MOM) down to 0.34% (in line with the
prior five-month range). The rate was just 3% higher versus the
level record a year earlier. Subprime 60+ day delinquencies saw a
modest decline in November to 3.98%, 1% lower than October. The
index was 13% higher compared to the same period in 2013.
Used vehicle values experienced a healthy bump in November, the
second consecutive increase following on from five months of
declines. The Manheim Used Vehicle Value Index was at 123.3 in
November, up from 121.8 recorded in October. The small bump in
recent months will help to contain loss severity on defaulted and
repossessed vehicles. This is particularly true in the subprime
sector, which is much more sensitive to changes in severity levels
than the prime sector.
With the advent of the high-spending holidays and people working
less, seasonal patterns typically produce marginally weaker
performance in December. However, asset performance is on track to
record a solid year in 2014 relative to the last five years.
Prime ratings performance remains on track to record one of the
best years ever, with 65 upgrades this year (through November), up
from 44 in 2013. Fitch's Rating Outlook for prime auto ABS is
positive entering next year. Even with rising loss rates this year,
most subprime subordinate note tranches from 2011-2012 were either
upgraded by Fitch or had Outlooks revised to Positive this
year.
Fitch's indices track the performance of $74 billion of prime
and subprime auto loan ABS. Prime auto loan ABS comprises 67% of
the indices and subprime the remaining 33%.
Additional information is available at
'www.fitchratings.com'.
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Fitch RatingsHylton HeardSenior Director+1 212-908-0214Fitch
Ratings, Inc.33 Whitehall StreetNew York, NY 10004orEugene
KushnirAssociate Director+1 212-908-0830orMedia Relations, New
YorkSandro Scenga, +1
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