S&P: Reduced Auto Sales to Limit Auto ABS?

    NEW YORK--Standard & Poor's--Feb. 28, 2001--The anticipated reduction in new-vehicle sales in 2001 could constrain financing levels and possibly securitization volume in 2001, according to a new report by Standard & Poor's titled "Auto Loan ABS Market Gains from Corporate Bond Market Woes." However, a negative outlook for the auto sector could benefit the auto securitization market.
    To date, there have been no downgrades or defaults on any Standard & Poor's-rated investment-grade auto loan asset-backed securities (ABS) due to poor performance. To the extent that there have been downgrades in the investment-grade auto ABS market, they have resulted from the downgrading of the credit enhancement provider, usually a letter-of-credit bank.
    Although credit performance remained strong for many auto finance companies throughout 2000, the weakened economy could put upward pressure on losses. Lower stock-market valuations and manufacturing layoffs will reduce the wealth that has accumulated over the past few years and put some highly leveraged consumers into default. Also, finance captives, which are beholden to their parent manufacturers, may be pressured into lowering their credit standards to help the manufacturers alleviate high inventory levels and make room for new models.
    The report is available on Standard & Poor's Web site at www.standardandpoors.com/ratings. Click on Forum. Then, under Ratings Commentary, click on Structured Finance. The report is also available on RatingsDirect, Standard & Poor's Web-based credit analysis system.
    For more information, members of the media may contact Lisa Tibbitts, media relations manager, at (1) 212-438-7530, or lisa_tibbitts@standardandpoors.com. ---CreditWire