This week, Kroll Bond Rating Agency (KBRA) released its auto loan indices for of January, highlighting that credit performance was mixed across securitized auto loan pools.
Analysts noted that annualized net losses in KBRA’s Prime Auto Loan Index for January fell 1 basis point month-over-month to 0.69 percent, while 60-plus-day delinquencies rose 2 basis points to 0.50 percent. Compared to a year earlier, the firm found that prime auto loan collateral performance continued to improve, with annualized net losses and 60-plus-day delinquencies falling 25 basis points and 11 basis points year-over-year, respectively.
KBRA pointed to stronger performance in 2018 vintage loan pools across the majority of prime auto loan issuers as the reason for the positive movements.
Meanwhile, annualized net losses in KBRA’s Non-Prime Index in January rose 73 basis points month-over-month and 61 basis points year-over-year to 10.25 percent. Analysts reported the number of borrowers that were 60-plus-days delinquent rose 27 basis points month-over-month and 45 basis points year-over-year to 5.70 percent.
The firm explained the weaker year-over-year performance in the non-prime space was partly driven by changes in index composition, as well as elevated loss rates in pools connected to American Credit Acceptance, Santander Consumer USA and Westlake Financial Services.
Already looking ahead, the firm expects delinquency and loss rates in KBRA’s Prime and Non-Prime Indices to hold steady or fall in February as borrowers begin to receive tax refunds, providing an additional source of cash flow to help them pay their installment contracts.