S&P Global Ratings said U.S. prime and subprime auto loan asset-backed securities (ABS) sector’s performance deteriorated in October compared to September and also weakened on a year-over-year basis. According to a report published this week, prime and subprime net losses increased in October, while recovery rates slipped.

However, analysts explained their modified subprime index — which excludes large deep subprime pools — reported year-over-year stability in losses and delinquencies.

“Vintage performance is also demonstrating weakness: cumulative net losses for the 2015 prime static pool index are at the highest level through month 12 since the 2009 vintage, and the 2015 subprime static pool index is showing the highest cumulative net loss level since 2008,” S&P Global Ratings said.

Analysts determined prime net losses rose to 0.71 percent from 0.64 percent in September and 0.53 percent in October 2015. They indicated most of the uptick in prime losses is attributed to a couple of regional banks whose auto loan ABS transactions S&P Global Ratings began rating in 2014 becoming a slightly larger share of the prime index.

“These issuers have slightly higher losses than the more established prime issuers,” S&P Global Ratings credit analyst Amy Martin said

“In addition, recoveries are declining, and some lenders have normalized their lending standards,” Martin continued.

S&P Global Ratings found that the subprime net loss rate rose to 8.60 percent from 8.43 percent in September and 7.38 percent a year earlier. Analysts noted that the year-over-year increase of 122 basis points is largely due to Santander’s Drive Auto Receivables Trust (DRIVE) and American Credit Acceptance (ACA) transactions representing a greater percentage of the outstanding collateral in the subprime index.

Analysts reiterated the modified subprime net loss rate, which excludes certain high-loss deep subprime issuers, rose only slightly to 6.56 percent from 6.39 percent in September.

Further, the rate was nearly stable year over year at 6.56 percent compared with 6.61 percent for October 2015.

S&P Global Ratings pointed out the prime 60-plus-day delinquency rate was nearly stable at 0.48 percent compared with 0.46 percent in September, but up substantially from 0.38 percent a year earlier.

The subprime 60-plus-day delinquency rate decreased to 4.67 percent compared with 4.82 percent for September, but was significantly higher than 4.03 percent a year earlier. The modified subprime 60-plus-day delinquency rate was 3.47 percent versus 3.61 percent in September and 3.44 percent in October 2015.

The firm reported recoveries for the prime sector decreased significantly to 49.79 percent from 54.32 percent in September, a decrease of 454 basis points. Year-over-year, prime recoveries dropped from 50.90 percent in October 2015.

“The captive finance subsidiaries of some of the automakers are reporting lower recovery rates on their newer vintages,” analysts said.

S&P Global Ratings added the recovery rate for the subprime sector decreased to 37.27 percent from 38.86 percent in September and 38.37 percent in October 2015. The modified subprime recovery rate was 38.89 percent compared with 39.63 percent in September and 39.13 percent in October 2015.