U.S. auto loan ABS continued to weaken in August, according to a report from S&P Global.
Net losses and 60-plus-day delinquencies in the prime and subprime sectors deteriorated on both a month-over-month and year-over-year basis, according to the report released today.
The subprime net loss rate increased to 8.35% in August, from 7.53% in July, and up from 6.60% at the same time a year prior. “The year-over-year increase of 175 basis points in subprime losses is largely due to deep subprime pools representing a greater percentage of the outstanding collateral in our index,” S&P wrote in the report.
On the prime side, the net loss rate in August was 0.68%, up slightly from 0.61% in July, but up from 0.50% at the same time a year prior. Unlike the subprime sector – which showed the recovery rate dropping to 37.34%, from 40.63% at the same time a year prior – the prime recovery rate increased to 54.87% in August, from 52.07 % in the year-prior period.
Delinquencies in both sectors are showed continued weakening, with the prime rate creeping up to 0.50% last month, from 0.47% in July and 0.41% in the year-prior period. The subprime 60-plus-day delinquency rate increased to 4.85% in August, from 4.74% in July and 4.14% at the same time a year prior. However, subprime delinquencies remain below the highest level in recent times, which was in August 2009 (5.19%), according to the ratings agency.
“Similar to losses, the increased mix of newer, deep subprime auto loan shelves is negatively affecting delinquencies,” S&P Global Ratings credit analyst Amy Martin said in the release.
