(The following statement was released by the rating agency)Link to Fitch Ratings' Report: Auto ABS Index - Australia: The Dinkum ABS Index - 2Q16https://www.fitchratings.com/site/re/886961SYDNEY, September 05 (Fitch)
Australian prime auto ABS losses in 2Q16 trumped the previous index high of 0.58% in 2Q15, with the annualised net loss rate (ANL) reaching 0.62%. The increase in losses is a reflection of persistently high arrears, according to Fitch Ratings' latest Australian Dinkum ABS Index.
At end-June 2016, 30+ days arrears were 1.5%, down from 1.55% in 1Q16. An increase in recovery timing could be fuelling the decline in the average recovery rate, which dropped 7pp to 35.3% over the quarter. Loss levels have remained significantly below Fitch's expectations, and we believe current ratings are able to withstand increased losses. Fitch believes lower-than-historical-average wage growth may be a major threat to borrower performance.
However, other economic fundamentals remain strong, with stable consumer sentiment, low unemployment rates and petrol prices.Fitch-rated auto ABS issuance was strong, with a record quarterly issuance of AUD2.95bn in 2Q16, up from the previous high of AUD2.9bn in 4Q13. The current and historical Dinkum ABS Index data is available in Excel form through the full report entitled, 'Auto ABS Index - Australia: The Dinkum Index - 2Q16', available at www.fitchratings.com or by clicking the link above.
Contact: Hai Duong LeAssociate Director+612 8256 0358Fitch Australia Pty LtdLevel 15, 77 King StreetSydney NSW 2000 AustraliaJames ZanesiDirector+612 8256 0306Natasha Vojvodic Senior Director, Head of Australian and New Zealand Structured Finance +612 8256 0350Media Relations: Leslie Tan, Singapore, Tel: +65 67 96 7234, Email: leslie.tan@fitchratings.com.Additional information is available on www.fitchratings.comALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S FREE WEB SITE AT WWW.FITCHRATINGS.COM. PUBLISHED RATINGS, CRITERIA, AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE, AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE CODE OF CONDUCT SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE. Fitch Australia Pty Ltd holds an Australian financial services licence (AFS licence no. 337123) which authorises it to provide credit ratings to wholesale clients only. Credit ratings information published by Fitch is not intended to be used by persons who are retail clients within the meaning of the Corporations Act 2001.