U.S. prime auto ABS, backed by both leases and loans, have experienced robust performance; but the subprime sector has not shared the same fate.

Net loss levels for prime auto ABS deals dropped for the fourth straight month in May while prime 60-plus delinquencies saw their lowest level in the past 10 years at 0.29%, according to Fitch Ratings’ latest index results which it published in a report today.

Prime annualized net losses (ANL) also saw a sharp drop in May over April, declining 30% to 0.17%. This rate was the second lowest level ever recorded and the same as in April last year, and 5.6% below that of May 2012. The record low for the index was 0.14% recorded in June 2012, according to the report.

The subprime auto sector, however, saw 60-plus delinquencies increase to 2.75% in May. Subprime ANL did see a decline, to 3.84%, said Fitch.

Overall, Fitch feels the auto sector is in ‘good shape’ to weather a slowdown in 2013 with both prime delinquencies and losses at low levels. Fitch does not anticipate any ratings impact and has a positive outlook for ratings performance in 2013, the report stated.

The ratings agency upgraded 18 prime outstanding classes of notes so far this year, up from 16 issued during the same period in 2012.

Fitch's prime and subprime auto ABS indices contain $68.7 billion of outstanding notes issued from 126 outstanding transactions. Of this amount, 71% are prime auto loan ABS and the remaining 29% subprime ABS.

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