Chinese Auto ABS Performance Stable, Despite Extended Pandemic-Control Restrictions

26 Sep 23 325 0 0

Chinese Auto ABS Performance Stable, Despite Extended Pandemic-Control Restrictions

Cool Story - Chinese Auto ABS Performance Stable, Despite Extended Pandemic-Control Restrictions

Beijing/Hong Kong Fitch Ratings for November 2022:

Vehicle sales fell in 2Q22, which was followed by a slowdown in auto loan ABS issuance in 3Q22. Nine transactions were issued during the quarter, compared to 14 during the same period in 2021, and the overall volume of issuance decreased by 20.5% year over year to CNY47.0 billion. As a result of the 3Q22 rebound in vehicle sales, Fitch Ratings anticipates a manageable pace of issuance through early 2023.

The annualized gross loss of China's vehicle ABS index slightly decreased from 0.42% in June to 0.39% in September 2022, but it was still higher than 0.34% in September of the previous year. Loans that are 31 to 60 days past due are now at 0.11%, up from 0.09% in June, while those that are 61 to 90 days past due are still at 0.06%.

Prepayment rates decreased somewhat from 7.6% to 7.0% over the past two years but remained between 6% and 8%. Recovery rates increased to about 30%, which is far higher than the pre-pandemic norm of 20%.

Fitch examined a global pool of data, including deals involving Chinese vehicle ABS, and found no seasoning advantages if the securitization took place within the first year of origination. According to the investigation, the primary factor influencing seasoning was default distribution. By front-loading defaults, the seasoning benefit is realized. Under its Consumer ABS Rating Criteria, Fitch does not explicitly modify seasoning.

A link to the entire report, "China Auto ABS Index - 3Q22," can be obtained in this press release or at www.fitchratings.com.

Contact:

Herman Ng

Associate Director

+852 2263 9614

herman.ng@fitchratings.com

Fitch (Hong Kong) Limited

19/F Man Yee Building 60-68 Des Voeux Road Central

Hong Kong

Tracy Wan

Senior Director

+86 010 5957 0988

Media Relations: Wai Lun Wan, Hong Kong, Tel: +852 2263 9935, Email: wailun.wan@thefitchgroup.com

Peter Hoflich, Singapore, Tel: +65 6796 7229, Email: peter.hoflich@thefitchgroup.com

Additional information is available on www.fitchratings.com.

All credit ratings provided by Fitch Ratings (Fitch) are subject to certain restrictions and exclusions. Click on the following website to view these exclusions and limitations: https://www.fitchratings.com/understandingcreditratings. Moreover, the following Details on Fitch's rating definitions for each rating scale and rating category, including definitions about default, can be found at https://www.fitchratings.com/rating-definitions-document. This website always offers publicly available ratings, criteria, and procedures. The Code of Conduct part of this website also provides access to Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance, and other pertinent rules and procedures. The pertinent interests of Directors and Shareholders are disclosed at https://www.fitchratings.com/site/regulatory.

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