Experian Information Solutions' research indicates that, while the credit quality of auto loans may be slipping, it remains high enough to ensure the strong performance of the 2011 and 2012 vintages of securities backed by such loans.

Auto ABS, in fact, performed extremely well through the recent financial crisis, drawing new investors, and spreads have tightened on new deals this year. Given the health of the underlying loans, it's clear why. In its most recent State of the Automotive Finance Market report, covering the fourth quarter of 2011, Experian said delinquency rates have been falling since 4Q09.

Among the Finance/Other category of lenders, which includes mostly specialty finance companies offering auto loans to subprime borrowers, the delinquency rate in the fourth quarter was 5.35%, down from 6.14% in 4Q10 and 6.45% a year earlier. Repossessions were also down across all lenders year over year, falling 47 percentage points to 2.47% among specialty lenders.

Other indicators are mixed. Loan-to-value ratios increased year over year for new vehicle loans, both for what Experian calls "super-prime" and "deep subprime" borrowers, but the ratio decreased across the board for used vehicle loans, which tend to be riskier.

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