Moody’s: Aussie ABS arrears rise but losses stable

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Just in from Moody’s Credit Ratings Agency:

Sydney, May 21, 2013 — Moody’s Investors Service says that the delinquencies across all Australian asset-backed security (ABS) programs have increased in Q1 2013 from Q4 2012. Nonetheless, losses have remained stable.

“At end-March 2013, for instance, the 30-plus delinquencies were at 0.46% for SMART ABS deals, and 3.14% for Bella ABS deals, compared with 0.42% and 2.39% respectively at end-December 2012,” says Alena Chen, a Moody’s Analyst.

“Nonetheless, net losses are stable as can be seen by motor vehicle recovery rates. ABS portfolios predominantly comprise motor vehicles and they have stable recovery rates. As a result, we expect net losses in Australian ABS transactions to remain low,” says Chen, who was speaking on the release of Moody’s report titled: “Australian ABS Performance Review: Q1 2013.”

The most seasoned outstanding pools were of the 2009 vintage. Cumulative defaults stayed the same, at 1.5% in both Q1 2013 and Q4 2012. Net losses were also unchanged, at 0.7%. Other outstanding vintages are less seasoned and have incurred less losses.

“Overall, our stable outlook for Australian ABS in 2013 reflects our expectation of stable delinquencies and limited losses given our expectations of: 1) a GDP growth of 2.0% to 3.0%, 2) a continuation of the low interest rate environment, and 3) an expected unemployment rate of 5.0% to 6.0%,” adds Chen.

About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.