With questions remaining as to whether the subprime mortgage fallout will put the brakes on consumer spending, subprime segments of U.S. term ABS could feel added pressure, according to the latest credit action report from Fitch Ratings.
‘While collateral performance for prime term ABS remains in line with earlier expectations for this year, subprime borrowers remain more sensitive to disruptions in the mortgage sector,’ said Director Kevin D’Albert. ‘As a result, Fitch will be monitoring the subprime credit card and auto sectors closely to see how losses and late stage delinquencies on subprime mortgages may affect performance.’
February proved to be a light month in terms of rating activity as Fitch upgraded four classes of auto loan ABS against no downgrades. So far in 2007, Fitch has upgraded 32 ABS classes while downgrading just two (compared with 49 upgrades and 35 downgrades in the same period in 2006).
‘Term ABS Credit Action Report: February 2007’ is available on the Fitch Ratings web site at www.fitchratings.com.