Stress in the construction equipment industry persists, with the six monthly average year-on-year changes in the mining index declining to 0.56% in August 2016 from 1.36% in August 2015. Also, WA 90+dpd delinquency for the 2014 vintage remained flat at 4% over the last six months, making it difficult to recover from deeper buckets. Also, the improvement observed in the core infrastructure index has not been consistent enough to support the recovery.
Tractor loans of 2014 and 2015 vintages are experiencing high delinquency levels. As of August 2016, WA 90+dpd delinquency stood at 6.45% for 2015 vintage loans, which is comparable to the loans of 2014 vintage at a similar level of seasoning. This however will have a limited impact on the transactions, because of high credit enhancement coverage on account of the significant amortisation of pass through certificates.
Ind-Ra observes a continual rise in portfolio at risk (PAR) for loans from microfinance institutions (MFI) since 1QFY17 for its rated MFI securitisations. The credit enhancement built up for Ind-Ra's rated MFI securitisations has been strong, due to faster amortisation of around 50% within the first six months after issuance.
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