(The following statement was released by the rating agency)
Link to Fitch Ratings' Report: Canadian Auto Loan ABS â Minor Speed Bumps in
2016
https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=879959
NEW YORK, May 25 (Fitch) A slowing economy, low oil prices and unemployment
pressures should lead to minor speed bumps for Canadian auto loan ABS in 2016,
though not enough to materially affect performance overall according to Fitch
Ratings in a new report.
Elevated over the past 18 months, used vehicle values are expected to soften as
supply rises in the latter half of this year. This coupled with GDP growth
slowing, high household debt levels and pockets of weakness in oil-dependent
provinces from low oil prices could make auto loans susceptible to marginally
higher delinquencies and losses, according to Senior Director Hylton Heard.
'Like U.S. auto loans, the best days are behind us for Canadian auto ABS, but
performance will remain within expectations,' said Heard. Further, the outlook
for ratings performance is stable, with positive rating actions likely to
continue for the remainder of the year.
One reason is consumer and bankruptcy laws, which are stricter in Canada and
allow creditors to gain access to a borrower's assets and wages through the
courts to pay down defaulted loans. This results in more disciplined consumer
behavior in Canada supporting overall asset performance historically. Also
helping is geographic concentration, with many Canadian ABS pools contained in
the highest populated provinces including Ontario, Quebec and British Columbia.
'The highly diversified economies in these regions mitigate exposure to regional
downturns, including slowdown in oil-dependent provinces like Alberta,' said
Heard.
The prolonged slump in oil prices is also boosting consumer demand, particularly
for larger vehicles of late. This coupled with the availability of cheap
financing is making for a stable wholesale vehicle market. Fitch expects this
trend to continue in 2016 though it will likely soften in the second half of the
year as used vehicles entering the secondary market rise.
'Canadian Auto Loan ABS - Minor Speed Bumps in 2016' is available at
'www.fitchratings.com' or by clicking on the above link.
Contact:
Hylton Heard
Senior Director
+1-212-908-0214
Fitch Ratings, Inc., 33 Whitehall Street, New York, NY, 10004
Puloma Mukherjee
Associate Director
+1-212-908-9131
Media Relations: Sandro Scenga, New York, Tel: +1 212-908-0278, Email:
sandro.scenga@fitchratings.com.
Additional information is available at www.fitchratings.com.
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