Auto ABS performed slightly better in January versus December with net losses and delinquencies dipping and recovery rates increasing, according to Standard & Poor's.
The aggregate net losses decreased to 1.64% from 1.68% the prior month. Meanwhile, the percentage of 60-plus-days delinquent loans dipped to 0.95% from 0.99% as of January. The recovery rates also strengthened, going up to 60.19% in January from 59.93% the prior month, the rating agency reported.
S&P said that the net loss rate, which is expressed as a percentage of the starting collateral balance and then annualized, in January for prime collateral was roughly 15% versus December, which was at 0.48%.
It also dropped 41% and 64% from January 2011 and January 2010, respectively. On the other hand, the subprime losses increased by roughly 5% to 5.65%. This was 10% more than January 2011, but improved by 40% versus January 2010, S&P noted.
Analysts generally categorize prime ABS deals as those backed by loan pools with initial expected cumulative net losses of 3% or less, average FICO scores of 680 or more, and APRs of 0% to 7%. They broadly expect loan pools that back subprime ABS to have cumulative net losses of at least 7.5%, average FICO scores below 620, and APRs of over 13%.
The recovery rates, which is the percentage of a defaulted loan's total value that is recovered via collateral liquidation or post disposition, stayed strong, S&P reported. This had slightly improved for prime collateral to 65.36% from 64.58% in the prior month, the rating agency stated.
Meanwhile, it has dipped by roughly 4% for the subprime sector to 42.42% in December 2011. The prime recovery rates are roughly 38% more versus January 2010, according to S&P.