The auto finance sector is propping up the securitization market, with year-over-year growth climbing 18% through June, according to Kroll Bond Rating Agency’s Midyear 2019 ABS Outlook published last week.
Auto securitization volume hit $68.5 billion through June, according to KBRA. “Despite plateauing new-vehicle sales, there has been tremendous year over year growth in auto-related ABS supply,” the report noted.
Captives Nissan Motor Acceptance Corp. and Toyota Financial Services increased their issuance, contributing to a 21.5% increase in prime auto loan ABS. Meanwhile, Capital One and Fifth Third Bank reentered the asset-backed securities market, as increased supply from Santander and Carvana bolstered nonprime volume 16.6%, the report noted. Lease ABS volume increased 8.2% through midyear.
Strong used-vehicle values and consumer credit improved collateral performance in both prime and nonprime segments, as well.
In contrast to autos, credit card and student loan ABS volumes have fallen 38.6% and 24.7% year over year, respectively.
Overall, credit performance remains stable across auto loans and unsecured consumer loans; prime auto loan losses have fallen over the past year and nonprime performance maintains stability.
The stable outlook leaves KBRA analysts “hard-pressed to point to any near-term catalyst that would derail consumer credit, and, by extension, consumer ABS fundamentals,” according to the report.
