Fitch’s Chief Credit Officer, Jeremy Carter, and Group Credit Officer, Andreas Wilgen, discuss the progress which has been made to prepare financial markets for the discontinuation of IBOR indices and highlight the risks which still remain.
Recent market and regulatory developments suggest that the immediate risks to German auto ABS transactions from declining diesel car prices have eased. This would be consistent with our decision not to adjust our asset performance assumptions so far in response to proposed driving bans and shifting consumer sentiment away from diesel, but it remains important to monitor developments and test transactions for their resulting sensitivities.
European carmakers are refocusing their strategy towards electric vehicles and catching up with specialised manufacturers. Carmakers have increased investments in plug-in-hybrids and battery electric vehicles with numerous model launches expected in the next 12 to 24 months.
Substantial progress in recent months will better prepare financial markets for the discontinuation of IBOR indices, but transition risks remain, Fitch Ratings says in a new report. Our ratings address the payment of interest (and principal) in accordance with the underlying terms of an obligation and would not be directly affected by transition from one reference rate to another or any accompanying spread adjustment.
Fitch expects to rate the Canadian Auto ABS deal for Mercedes-Benz Financial Services Canada Corporation. MBARC Credit Canada Inc. Series 2019-A is a prime auto lease ABS transaction. Please listen to our analysts, Hylton Heard, Michael Buzanis, and Cole Mackenzie, discuss the deal.
The European Auto ABS annualised loss index rose by 3bp to 0.34% in 4Q18, its highest level since mid-2014. The Fitch 30+ and 60+ Delinquency Indices increased by 4bp and 2bp relative to 3Q18, respectively.
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Risks to Watch in European Auto ABS available here On-Demand
The ABCP Scorecard features snapshots for each of the ABCP programmes rated by Fitch globally. Through a combination of key programme facts and attributes – including conduit biographical data, structural support features and protection mechanisms, and programme outstandings – our profile reports provide investors with consistent background information for evaluating ABCP programmes.
Chargeoffs and delinquencies on Canadian credit card ABS fell to near record lows to close out 2018, despite a continued rise in household debt, and Fitch Ratings expects chargeoffs to remain below 3.00% heading into the first quarter of 2019, according to Fitch Ratings' latest credit card index.
Normalization will continue for U.S. credit card ABS in 2019 following a solid finish to close out the year prior, according to Fitch Ratings in its latest quarterly "Movers and Shakers" index. Chargeoffs finished the year below 3% while delinquencies remain stable following increases to both during the middle of the year.
Kevin Duignan, Head of Financial Institutions, discusses the outlook for aviation across corporates, financial institutions, and structured finance with Craig Fraser, Nathan Flanders, and Hylton Heard.
Our ABS Monthly Update provides an overview of the latest U.S. and Canadian ABS rating actions, presale reports, and research broken down by sector. Sign up to receive the ABS Monthly Update as well as research and presale alerts.
As part of our Risks to Watch series, Michael Taiano, Senior Director, Financial Institutions, and Ian Rasmussen, Senior Director, ABS, discuss the key credit concerns of consumer lending over the next 12 months.
The structured finance markets in North America are positioned for another stable year in 2019; however, Fitch Ratings' outlook report points to several noteworthy external factors investors should consider.
Following slight increases in the first half of 2018, Fitch's U.S. Prime Chargeoff Index fell below 3% in third quarter 2018 (3Q'18) to an average of 2.97%. 60+ day delinquencies, and declined in the third-quarter to an average of 1% from 1.06% in 2Q'18, an indication that chargeoffs should remain lower in the short term.
Canadian consumers are adeptly keeping up with rising household debt and still paying their credit card balances on time with chargeoffs and delinquencies remaining stable, according to Fitch Ratings' latest credit card index.
Sears' Chapter 11 bankruptcy filing, announced on Oct. 15, 2018, and the anticipated closing of 142 stores by year end should not have an impact on the ratings of Citibank Omni Master Trust, says Fitch Ratings.
Late-cycle credit behaviour is manifesting in securitisations more frequently of late, which has triggered more unsolicited commentaries from Fitch Ratings on structured finance deals not rated by the agency and in certain sectors, according to the rating agency in a new report.
Positive performance of U.S. FFELP student loan ABS is offsetting immediate maturity risk brought on by rising income-based repayment (IBR) levels across FFELP portfolios. However, if growth surpasses expectations in a stressed environment, IBR payments could adversely affect ratings, particularly on non-turbo transactions with little credit enhancement.
Fitch Ratings believes the performance of Auto ABS in China is stable despite Fitch's China Auto ABS Index showing a marginally higher annualised gross loss (AGL) and marginally higher monthly delinquency ratios compared with March 2018. The minor deterioration is the result of a smaller outstanding balance of transactions rather than deteriorating sector performance. The issuance of new transactions has been slow in 2018, which has resulted in more securitised auto loans being repaid than have been newly securitised.