According to Equifax, the 60+ day delinquency rate on subprime auto loans hit a record in March. S&P countered that Equifax is double-counting loans, adding that delinquencies aren’t at record levels in the ABS market.
Both delinquencies on securitized student loans and prepayment rates on student loan ABS are up and could increase further due to the Biden administration’s efforts to help distressed borrowers.
Aviation ABS tied to Russia and Ukraine hit with downgrades; Pennsylvania’s private student loans deals from 2020 and 2021 upgraded; KBRA adds Opportunity Zone identifier to commercial MBS tracking; credit card ABS performance expected to decline.
MBS and ABS tied to floating-rate assets could see rising delinquencies as interest rates increase. Inflation also remains a concern, though Fitch and Moody’s suggest that most deals can weather the storm.
The performance of MBS and ABS isn’t expected to be directly impacted by the fallout of Russia’s invasion of Ukraine in the near term; prepayment rates on agency MBS declined in February.
Borrowers with loans in various types of MBS and ABS could be stretched as interest rates increase, according to industry analysts. Prepayment rates are also likely to slow.
Fannie priced a credit-risk transfer deal linked to single-family mortgages; the SEC won’t take an enforcement action against Two Harbors; performance of consumer ABS backed by loans originated by marketplace lenders expected to decline.
Non-agency MBS hit the market ahead of Thanksgiving; rating upgrades possible with new commercial MBS methodology at Moody’s; timeshare securitization performance stable; Fitch extends comment period for proposed criteria to rate shipping container ABS; California launches tobacco-settlement securitization.
Changes implemented in response to the financial crisis of 2008 helped the MBS and ABS markets perform better than expected at the onset of the pandemic.
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