Canadian ABS market remains strong despite consumer bankruptcies

© Can Stock Photo / japanachai

Receivables underlying asset-backed securitizations in Canada continue to perform “extremely well” despite a 6% year-over-year increase in consumer bankruptcy filings, according to a recent DBRS report.

In fact, a first quarter Consumer Credit Report by DBRS showed cumulative credit losses in auto loan securitizations remained low at 0.09% for the 2018 vintage.

Through July, the Canadian securitization market totaled $95.4 billion, according to DBRS’s July 2019 Canadian Securitization Market Overview report published Monday. Auto-related transactions accounted for 27.5% of the market, while credit cards grabbed 38.4% market share.

Credit quality for the underlying collateral across asset classes remains strong, according to the report, despite “the high level of household indebtedness [which] remains a significant cause for concern as it leaves Canadian households more vulnerable to cash-flow shortages.” That said, outstanding notes are “enhanced sufficiently” to withstand volatility, the report added.

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