Showing Stress.....& The Impotent Fed.

I think it is safe to say that the spreads in the auto & credit card segment will spike much higher in the coming quarters.... And this trend will spread around the globe.....

Ich bin mir ziemlich sicher das die Risikoaufschläge besonders im PKW und Kreditkartenbereich in den nächsten Quartalen noch erheblich steigen werden. Und das betrifft dann nicht nur die USA betreffen...... Passend hierzu aus der FAZ Unternehmensanleihen : Dunkle Wolken über spekulativen Werten

Worry About Stretched Firms,Consumers Hits Debt Markets WSJ
A range of corporate bonds and securities backed by consumer loans and mortgages have sagged in recent weeks to levels last seen in March, when worries about a financial crisis hit a high.

This time there is much less panic, but concern is building about the health of businesses and consumers.

The weakness is most visible in the debt of auto makers, retailers and companies in sectors reliant on consumer spending. Bonds issued by some financial institutions are also strained.

While a large-scale credit meltdown looks unlikely now, rising bond yields will make it harder and more expensive for corporations and individuals to finance their businesses, homes, education and day-to-day expenses.

Investors are demanding higher interest rates on most corporate and asset-backed debt. The average junk bond now yields around 8.1 percentage points more than Treasury securities, or 11.5%. That compares with a yield of 11.1% and spread of 8.6 percentage points on March 17, according to data from Merrill Lynch & Co.

Average spreads on bonds backed by auto loans and credit cards are three percentage points and 2.1 percentage points, respectively, close to their highs this spring. .....

Moody's Investors Service recently surveyed 31 companies that distribute gas to households. Of the group, 18 companies said an increasing number of customers were falling behind on their gas bills this year compared to last year

> No surprise to see that banks are once more procyclical in their lending habbits ( Same is happening in Europe WSJ: Euro Banks Tighten Lending Standards via Calculated Risk) ....... Too bad that there is so far no bill/law that allow Bernanke & Paulson to order banks to lend...... But with all the attempts we have seen you can´t even rule this out for the future ........ :-)

> Schon bemerkenswert wie es Banken immer wieder schaffen Ihre Kreditvergabekriterien immer prozyklisch dem Markt anzupassen anstelle in Zeiten des offensichtlichen Exzesses gegenzusteuern ( gleiches passiert auch in Europa Banken geizen mit Krediten FTD ).... Zu dumm das es bisher noch keine gesetzliche Handhabe für Bernanke und Paulson gibt die Banken zu verpflichten mehr zu vereleihen.... Nach allem was bisher aus den USA gekommen ist kann man aber selbst das zukünftig nicht mehr ganz auschließen..... :-)

U.S. Subprime Auto ABS Indexes Weaker

no surprise that the subprime mess is spreading. to be honest i was surprised that the delinquency rate is still so much lower than in the real estate backed securities (see graph). but i´m pretty sure that this will change very soon. the real job related fall out will lead to a big hit in this segment. and it is no wonder that the "bank´s willingness to make consumer loans" (graph 2)is falling fast......

keine überraschung das die probleme im suprimesegment nicht isoliert bleiben. ich persönlich hätte erwartet das die "problemkredite" deutlich näher an den der immogedeckten hängen (s. grafik). gehe jde wette ein das sich das in ganz naher zukunft ändern und angleichen wird. der negative arbeitsmakteffekt des immogetriebenen abschwungs wird diese jahr eintreten. kein wunder also das die banken in sachen konsumentenkredite ( 2.grafik) rapide fällt......


but i think that gm, ford, chrysler etc have no choice but to lend to everybody with a pulse......to sell their cars/suv´s

will be interesting to see how long the investors are picking up the auto abs and when/if we will see a similar problems like the ones in the mortgage mbs. http://immobilienblasen.blogspot.com/2007/02/no-worries-loan-loss.html

dumm nur das gm, ford, chrysler etc wohl keine andere wahl haben als weiter an jeden noch so schwachen kreditnehmer kredite zu verteilen.....um überhaupt noch autos und suv´s zu verkaufen.

spannend bleibt die frage wann und ob der markt genauso implodieren wird wie das mit immobilien hinterlegte mbs segment. (link oben)

thanks to realist and russ winter http://wallstreetexaminer.com/blogs/winter/?p=477#comments

NEW YORK, Feb 28, 2007 (BUSINESS WIRE) -- Subprime delinquencies for US auto loans rose 4.1% in January versus December 2006, while the annualized net loss (ANL) index spiked 31.4%, ...

'Approximately 70% of the transactions in the subprime ANL index recorded higher loss levels in January as the index hit its highest level in nearly three years"....

The subprime ANL jumped to 8.67% in January from 6.60% in December 2006, and on a year-over-year basis, the index was 24.2% higher versus January 2006. However, the spike in ANL may have been exaggerated slightly by one subprime issuer included in the index.

This issuer implemented a change in their servicing policy resulting in a spike in their ANL. ...... The subprime delinquency index was at 2.82% in January, slightly higher than the 2.71% recorded in December 2006.



In the prime sector, 60+ days delinquencies were at 0.58% in January, 9.4% higher versus December 2006 and 3.3% lower on a year-over-year basis.

Prime ANL were 0.89% in January, 7.2% higher than in December. This is the highest level the index has hit since February 2006. However, ANL remain down on a year-over-year basis by 17%.

Auto ABS issuance was quite healthy in January with $3.47 billion coming to market in four transactions, namely two subprime, one prime, and one motorcycle loan transaction. Issuance in early-to-mid February was active with over $8.0 billion issued through the first three weeks of February; $12.37 billion was issued in February 2006.