ABS deals register outstanding pool balance

Asset-backed securities (ABS) transactions backed by consumer loan portfolios in the Europe, Middle East and Africa (Emea) region accounted for an outstanding pool balance of €16.4 billion (Dh93bn) distributed among 37 underlying pools of receivables as at the end of the first quarter of 2008, Moody's Investors Service said yesterday.

Moody's index report, which covers performance data up to the end of March, provides details on delinquencies, defaults and losses for EMEA consumer loans ABS transactions.

"In Q1-2008, the level of delinquencies 90-180 days overdue remained stable at 0.77 per cent, up marginally from 0.56 per cent in Q1-2007. Net cumulative defaults remained stable at 0.73 per cent, up just by 0.09 per cent from one year previously. "Cumulative losses ended the quarter at 1.22 per cent, a slight increase from 1.05 per cent in Q1-2007," said Olimpia da Silva, a Moody's associate analyst and co-author of the report.

The EMEA consumer loans ABS segment displayed an average constant prepayment rate of 15.7 per cent in Q1-2008 and continued the upward trend that has set in since Q3-2003. Moody's noted that differences in transaction definitions limit the comparability of performance data and caution needs to be applied when looking at this information.

Generally, EMEA consumer loan portfolios backing ABS transactions comprise three types of loans: personal loans, purpose loans and auto loans. The transactions are backed by portfolios from various EMEA jurisdictions, the largest markets being Italy and Spain at present.

"As regards the macroeconomic environment, GDP growth in Europe is to ease somewhat but to remain robust this year. The unemployment rate for the Eurozone is 7.1 per cent, the lowest since record-keeping began in the current form in 1992. However, demand for consumer goods is slipping as household budgets are affected by inflation, higher borrowing costs and moderate real wage growth," said Nitesh Shah, a Moody's economist and co-author of the report.