OREANDA-NEWS. Australian prime auto asset-backed securities (ABS) losses improved over 4Q15, with the annualised net-loss rate dropping 13bp quarter on quarter (qoq) to 0.39% in December 2015, as new transactions were added to the index, according to Fitch Rating's latest Dinkum ABS Index.

Prime auto ABS issuance was at a record high of AUD6.8bn in 2015, 13.5% higher than the previous year. The fourth quarter experienced the highest quarterly issuance, with three auto ABS transactions issued, totalling AUD2.6bn. No transactions were redeemed. The outstanding collateral underlying the index increased by AUD0.9bn to AUD10.8bn.

The 30+ and 60+ delinquencies increased 11bp and 17bp year-on-year in December 2015 to 1.10% and 0.54%. Arrears deteriorated due to Christmas and holiday spending. Borrowers may have struggled to adjust spending following lower real wage growth over 2015. Arrears were assisted by retail petrol and diesel fuel prices declines of 12.9% and 17% in the year to December 2015, which helped alleviate spending pressures.

Recovery rates are trending downwards, as competitive new car sale prices put downwards pressure on used vehicle prices. Recovery rates on repossessed cars were 44.3% in December 2015.