A bit of ageing becomes the prime auto ABS sector, according to Fitch Ratings. With 11 upgrades, the asset class dominated positive ratings movement activity for U.S. term ABS in April.
The upgrades came on five transactions sponsored by BMW Vehicle Owner Trust and the MMCA Auto Owner Trust, after the rating agency noticed increased available credit enhancement in excess of expected remaining losses. "The securities can now withstand stress scenarios consistent with the upgraded ratings and still make full payments to investors in accordance with the terms of the documents," the rating agency said in a report released last week.
Fitch noted the broad economic data, specifically on U.S. personal income and consumer spending that increased 0.5% and 0.6%, respectively. Real GDP grew at an annual rate of 4.8% in the first quarter. Although the numbers suggest that the U.S. economy is seeing robust growth, Fitch says inflation is still a concern, as energy and commodity prices continue to inch higher.
"These trends, along with increased competition among lenders, especially in the sub-prime segment, will be watched carefully," said Fitch Director Kevin D'Albert.
On the downside, Fitch issued nine downgrades to the aircraft finance sector, which had more downgrades than any other sector.
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