With rising unemployment and weaker job creation combined with an anticipated rise in bankruptcy filings, both Credit Suisse First Boston and Fitch Ratings issued research updates on the auto loan sector of the ABS market. While both concur that delinquency and loss performance - and therefore spreads - will remain under pressure until the economy turns around, structures are fundamentally sound.
Boosted by incentive loans that have seeped back into the strategies of captive lenders, auto sales have been strong thus far in 2002, simultaneously creating concern in the used car market. DaimlerChrysler N.A. Holdings was the only one of the Big-Three U.S. auto manufacturers with a dip (-4%) in sales, reports Fitch, and all of the Asian captives had a strong sales month in July. CSFB adds that the Big Three have outperformed the industry as a whole.