The 60-day-plus delinquency rate on subprime auto ABS hit a record in December. Performance is expected to decline this year and non-investment-grade ratings could face downgrades.
Delinquencies and impairments continued to increase on unsecured consumer ABS and subprime auto ABS at the end of 2022. Credit card ABS performance is holding up better.
Fitch Ratings said the most robust subprime auto ABS issuers will probably perform well even in a downturn, but several risks lie ahead for the sector.
SFA is seeking feedback on revisions to TRID Grid for residential MBS; timeshare ABS properties and borrowers are under evaluation following Hurricane Ian.
Delinquencies on auto ABS are now above pre-pandemic levels, while losses are approaching the same threshold. Still, rating services aren’t too concerned, noting used vehicle prices and unemployment levels.
While the Biden administration’s student loan debt forgiveness program doesn’t apply directly to borrowers with private student loans in ABS, prepayments on the loans are expected to increase.
The Inflation Reduction Act will likely increase solar ABS transaction volume and improve performance, KBRA said, due in large part to its enhancement of an existing investment tax credit.
The creation of a U.S. sovereign wealth fund could grease the skids for an end to the conservatorships of Fannie Mae and Freddie Mac.
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