Fitch: Further Challenges Ahead for Auto-Backed ABS in 2003

Business Wire, Feb 28, 2003

Business Editors

NEW YORK--(BUSINESS WIRE)--Feb. 28, 2003

Auto-backed Asset-Backed Securities (ABS) should experience more challenges in 2003, according to a new Fitch Ratings Report titled 'Auto-Backed ABS: 2002 Review and 2003 Outlook'.

"Overall, auto-backed ABS should experience more challenges in 2003, although the outlook appears stable. Delinquencies and losses will continue to be stressed and may face further performance deterioration," said Tom Nieliwocki, Director, Fitch Ratings. "Prime issuance for auto-backed ABS should grow slightly in 2003 thanks to several factors including cheap funding rates and a reliance on ABS funding by major issuers. Subprime issuance should be flat in 2003 as several issuers have stated their desire to slow growth in response to the volatile market."

Auto-backed ABS issuance once again set a dollar volume record for issuance totaling more than $95 billion in 2002. Issuance was driven by consistent new vehicle sales throughout 2002. Auto sales almost reached the 17 million unit mark, driven on by incentives, which will likely to continue in 2003.

Weakness in the U.S. economy adversely affected the auto ABS market in 2002. Auto ABS universally experienced an increase in delinquencies, gross losses, and net cumulative losses. Additional performance pressure was caused by a weakening in the wholesale market, leading to lower recoveries and higher loss severities. However, there were no transaction downgrades in 2002 in the prime sector, and performance was within expectations. Performance was more volatile in the nonprime/subprime sector, but the majority of these transactions remained near expectations.

The report is available to all investors on Fitch's corporate site, 'www.fitchratings.com' or by contacting Sara Grohl at 212/908-0564 or via e-mail, 'sara.grohl@fitchratings.com'. For more information about Fitch's comprehensive subscription service FitchResearch, which includes all presale reports, surveillance, and credit reports on more than twenty asset classes, contact product sales at 212/908-0800 or at 'webmaster@fitchratings.com'.