KBRA publishes study – Consumer ABS: implications of state early exclusions from unemployment
NEW YORK–(COMMERCIAL THREAD) – Kroll Bond Rating Agency (KBRA) publishes study on the implications of state early exclusions from unemployment on consumer ABS credit.
Key points to remember
Although the impact of early government withdrawals on the performance of ABS consumer credit is difficult to assess, we do not believe that it will significantly affect ABS consumer credit given the strength of the balance sheet. consumers, expectations of increased employment and rising wages.
The ABS departments of unsecured auto loans that provide monthly asset level information have relatively high exposure to opt-out states, while ABS issuers in the unsecured consumer loan and prime auto sectors have relatively high exposure to opt-out states. order are more diverse nationally and have less exposure.
World Omni’s non-prime (WOSAT) and prime (WOART) auto loan ABS departments are the most heavily exposed, with 89% and 82%, respectively, of their outstanding securitized loans coming from the 26 states that have announced their intention to opt out of some or all federal unemployment benefit programs. However, the delinquency rates for both shelves are lower than pre-COVID levels, allowing performance to normalize.
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KBRA is a full service credit rating agency registered in the US, EU and UK, and is designated to provide structured finance ratings in Canada. KBRA ratings may be used by investors for regulatory capital purposes in several jurisdictions.