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The protracted slowdown in economic growth will further hit repayment capability of truckers and put pressure on the quality of the commercial vehicle loan pool, according to rating agency Fitch.
The 90-day-plus dues are expected to increase in 2014. The rise could be prominent for loans of recent vintage. Also, dues in the 180-day-plus category are expected to rise modestly, Fitch said in a statement.
The sluggish investment climate in the industrial and construction sector has shrunk demand for road transportation. There has been a 28.7 per cent drop in sales of medium and heavy commercial vehicles in the January-October period in 2013 over the same period in 2012. The dues (average 90-day) for transactions in 2012 was 2.51 per cent and it was a shade lower at 1.87 per cent for 2013. For the 180-day-plus dues category it was 0.49 per cent in 2012.
Despite the deterioration in quality of the commercial vehicle loan pool, the rating performance for asset-backed securities transaction, was stable. There is a sufficient buffer (amount) in securitisation transactions to absorb shortfalls and the potential increase in principal losses.
The average cumulative defaults for loans securitised in 2012 was 2.5 per cent, with the worst performing transaction showing a default rate of six per cent. These levels are within the base and stressed case scenarios, Fitch said.
The outlook for 22 securitised transactions is stable with a rating of 'BBB'.
