By Chris Mrazek, Managing Director, ABS, Fitch Ratings and Kevin D'Albert, Director, ABS, Fitch Ratings

Slowly improving economic fundamentals continue to exert a stabilizing influence on rating actions and collateral performance for non-mortgage related term ABS. While the summer months brought record-high energy prices and weaker than expected job growth, consumer credit quality and collateral performance in the term ABS market remained stable and personal income and consumer-spending levels remained largely on track. Coupled with lower personal bankruptcy filings (for the first time in five years), the economic picture for consumers looks more durable moving forward. Fitch expects continued stable term ABS performance for the remainder of 2004 and into 2005, though there are some potential risks that may impede the path to stabilization, including a sluggish labor market, the effects of rising rates on various credit sectors, high energy prices and on-going concerns about the long-term health of the subprime borrower.

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