Non‑prime ABS shows stress
Non‑prime auto ABS is showing rising delinquencies, higher LTVs and more extensions, signaling greater credit strain in the subprime tier and fresh questions for securitization buyers. (x.com)
KBRA’s non‑prime U.S. auto‑loan ABS index showed early‑stage (30–59 day) delinquencies rose 19 basis points month‑over‑month in June 2025, a larger move than the prime index. (kbra.com) Fitch reported 60+‑day delinquencies in subprime auto loan ABS reached 6.74% in 2H25, up from 6.15% in 2H24, and flagged weaker vintages as a driver of rising stress. (fitchratings.com) TransUnion data cited in sector coverage shows the share of used‑vehicle loans with origination LTV above 120% climbed to roughly 53% by Q2 2025. (wardsauto.com) TransUnion/Bancrate reporting also puts the average used‑car origination LTV near the mid‑120s (about 127% reported in 2025), increasing negative‑equity risk inside securitized pools. (bankrate.com) Public filings and industry trackers show term‑extension activity spiking in subprime servicers — DriveTime’s extension rate moved from about 4.71% to 6.41%, Carvana’s subprime extensions rose from ~3.72% to ~5.41%, and Westlake’s subprime extensions exceeded 9.5% in recent reporting. (news.dealershipguy.com) Market reaction has included wider auto ABS spreads after headline issuer failures; IMF analysis noted both prime and subprime auto spreads widened and BBB subprime tranches moved roughly 50 basis points in stressed months, and industry coverage tied part of that repricing to the Tricolor bankruptcy. (imfconnect.org) Despite stress in non‑prime collateral, securitization volumes stayed large — S&P/Auto Remarketing reported record U.S. auto loan ABS issuance in 2025 while KBRA forecasted overall ABS new‑issue volume could reach about $385.2 billion in 2026 and noted that most downgrades in 2025 were concentrated in non‑prime auto and solar ABS. (autoremarketing.com)
