DALLAS–Some bonds backed by subprime auto loans are beginning to see performance issues resulting from delinquencies in the underlying loans.
A bond issue called Skopos Auto Receivables Trust 2015-2, a package of subprime auto loans sold in November, has seen about 12% of the underlying loans now go at least 30 days past due, a third of which were more than 60 days delinquent, according to The Wall Street Journal. In another 2.6% of loans, borrowers had filed for bankruptcy or the vehicles had been repossessed, the Journal reported.
“Those borrowers are at the outer fringe of the auto market,” The Wall Street Journal said in its analysis. “Still, the high level of missed payments for loans made so recently is a warning sign for an industry that needs every customer it can get to keep sales increasing at a record pace.”
The debt was issued by Skopos Financial LLC, a Dallas-based lender that specializes in loans to people with weak or no credit histories, are in line with those for several similar bond deals from other lenders around the same time, the Journal said, noting that about 12% of the loans backing bonds sold in November by Exeter Finance Corp., another Dallas-based subprime lender, were more than 30 days delinquent through February, according to the company.
The 60-plus day delinquency rate among subprime car loans that have been packaged into bonds over the past five years climbed to 5.16% in February, according to Fitch Ratings, the highest level in nearly two decades.