Delinquencies for both small/mid-ticket and heavy metal U.S. equipment lease ABS portfolios continue to trend upward in 2008, Fitch Ratings said today.
The heavy metal portfolio, which made up of leases and loans on large construction and agricultural equipment, has experienced more pronounced deterioration due to the weak economy, particularly the decline in new housing starts, and potential softness of the commercial real estate sector, Fitch said. As of June 2008, 60+ day delinquencies in the heavy metal index reached 0.98%, which is still below Fitch's recessionary expectations. Transactions supported primarily by construction equipment have experienced significantly higher delinquencies relative to agricultural equipment collateralized transactions.
However, performance in small/mid-ticket and heavy metal portfolios in 2008 remains within Fitch's expectations along with sufficient credit enhancement. As a result, minimal ratings volatility is expected and cumulative net losses should range from 1.5% to 5% for small/mid-ticket transactions and 1% to 3% for the heavy metal portfolio, Fitch said.