RPT-Fitch: Resilient U.S. Auto ABS Stays On Course in September
Oct 25 (Reuters) - (The following statement was released by the rating agency)
Performance of U.S. auto ABS continues to exceed expectations even in a time of the year when performance is weakest, according to the latest index results from Fitch Ratings.
Annualized net losses (ANL) were flat for prime auto loan ABS. A major factor is the used vehicle market's somewhat unusual resiliency. Used vehicle values typically begin to soften as summer comes to a close and endure its weakest period during the fall months. However, this has not been the case this year. An unexpected bounce in used vehicle values last month supported higher recovery rates, contained loss levels and supported auto ABS asset performance. Subprime auto ABS losses are likely to rise as the year comes to a close, though asset performance should remain within expectations going into 2014.
Positive rating actions issued in 2013 surpassed the level recorded in 2012. Fitch upgraded 35 outstanding classes of prime auto loan ABS notes in 2013. This represents a 40% jump from the 25 upgrades issued in 2012. We expect this positive trend to continue into 2014, given current asset performance and low loss rates currently tracking below initial expectations.
Prime 60+ day delinquencies ticked up to 0.36% in September, a 9% increase month-over-month (MOM), but down 7.7% compared to 2012. ANL were unchanged at 0.32% last month, 14% higher year-over-year. However, the rise was only due to near-record losses in September last year.
In the subprime sector, 60+ day delinquencies stood at 3.45% in September. This represents a 7.5% increase compared to August but the rate is virtually unchanged versus a year ago.
The subprime ANL index unexpectedly declined to 8% in September MOM to 4.84%, 14% below year-ago levels. The decline in losses was primarily driven by a sale of charged-off post-bankruptcy accounts undertaken by a single issuer, and the proceeds from the sale benefitting the trusts.
Used vehicle pricing was solid in September as values rose nearly 2% versus September 2012. The Manheim Used Vehicle Value Index crept up to 122.8 in September, the fourth consecutive increase in the index.
Despite the unusual fall strength, Fitch expects used vehicle values to soften through the end of 2013. Used vehicle supply gradually ticks up driven by higher trade-in and off-lease return volume.
Fitch's auto loan ABS indices total $67.2 billion of outstanding notes, of which 68% or $45.44 billion comprises prime auto loan ABS, and remaining 32% non-prime auto loan ABS.
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