Standard & Poor's: Subvened Auto Loan ABS Perform Better

    NEW YORK, Feb. 14 Auto loan ABS comprising subvened
loans -- those that carry interest rates below the prime lending rate --
perform better than securitizations of regular auto loans, according to Amanda
Soriano, a director in Standard & Poor's Structured Finance group.
Ms. Soriano made her comments at Information Management Network's Sixth Annual
Summit on Asset Securitization, held last week in Phoenix.
    "These loans are generally made to borrowers with FICO scores of 700 or
better and they typically have lower prepayment rates and losses," Ms. Soriano
said.  "Based on static pool data provided by several issuers that have
included these contracts in their securitized pools, it is clear that subvened
collateral seems to perform four times better than nonsubvened loans," she
added.
    Performance for prime auto securitization is expected to remain stable
into 2001, given the better characteristics of more recent pools beginning in
1998 compared with those securitized earlier.  Barring a drastic reduction in
used car values, credit performance should benefit from operational
adjustments in underwriting and servicing made by most of the captives and
other prime lenders after higher losses incurred in 1996-1997 securitizations,
Ms. Soriano said.
    "Today, we are seeing stable losses for most of the prime segment of the
auto industry. Net losses for prime pools are expected to be in the 1%-2%
range," she said at the conference. -- CreditWire