Auto ABS net loss rates were 0.89% as of May 2012, increasing four basis points from April, Standard & Poor's said in a report released Friday. The previous month had the lowest rate since the rating agency started tracking them in 2006.
According to S&P, the current loss levels have improved on a year-over-year basis. The losses were 17.78% less versus 1.09% in May 2011 and 65% lower compared to 2.52% in May 2009.
While recoveries were stable in May, 60-plus-day delinquencies rose slightly to 0.77% from 0.68%, although they remain below the 1.26% level in May 2009.
The prime sector's net loss rate is close to the lowest level since 2006, S&P added. As of May 2012, the rating agency reported that the net loss rate for the prime sector was 0.16%, mostly unchanged from April. This number is a percentage of the starting collateral balance and then annualized.
To compare, the prime net loss rate dropped roughly 53% in May 2011 and 71% May 2010,. The losses are about 88% lower versus May 2009.
Meanwhile, the agency said that the subprime net loss rate has stayed nearly constant for the last three months at roughly 3.16%, which is about a 7% from May 2011, 15% from May 2010, and 59% drop from May 2009.
S&P generally categorizes prime ABS deals that are backed by loan pools with initial expected cumulative net losses of 3% or less, that have average FICO scores of 680 or higher, and that have APRs of 0% to 7%.
The agency generally project loan pools backing subprime ABS offerings to have cumulative net losses of at least 7.5%, average FICO scores of less than 620, and APRs of over 13%.