NEW YORK -

Fitch Ratings analysts used the terminology “minor cracks” to describe the auto ABS loss trends they continue to see emerging in both the U.S. prime and subprime markets.

Analysts spotted that subprime annualized net losses rose for the fifth consecutive month to 8.05 percent in October, further diverging from prime annualized net loss trends.

“Despite weaker asset performance, Fitch-rated subprime auto loan ABS are still performing well within initial expectations heading into the end of the year,” Fitch said.

The firm explained that prime and subprime ABS asset performance continues to perform well within historical levels supporting positive rating actions across both sectors throughout the year. Fitch upgraded 66 tranches of outstanding prime and subprime auto loan ABS notes through October of this year, up from 63 during the same period in 2014.

“Looser underwriting including lower FICO scoring, higher loan-to-values (LTV) and extended loan terms witnessed in 2013-2014 vintage securitized ABS pools are contributing to softer asset performance in late 2015,” analysts said.

Fitch reported prime annualized net losses reached a four-year high of 0.53 percent in October; a reading virtually unchanged over September. Those losses also ended up 33 percent above year-earlier levels.

Analysts pointed out that prime annualized net losses remain well below the historical average figure of 0.93 percent going back to January 2001. They mentioned prime 60-day delinquencies stood at 0.38 percent in October versus 0.39 percent the prior month. Fitch also said delinquencies were only 5.6 percent higher in November versus a year earlier.

The firm also reiterated that subprime annualized net losses remain well below the peak recessionary levels of 10 to 13 percent recorded in late 2008 and early 2009. The October annualized net loss figure was also just 5.8 percent higher versus the same month in 2014.

Fitch indicated subprime 60-day delinquencies rose to 4.56 percent in October, up 2.2 percent over the prior month and 13.4 percent higher versus October 2014. The firm added the peak delinquency range was 4.75 percent to 5.10 percent recorded during the recent recession.

Analysts went on to mention “solid” used-vehicle values late this year are supporting auto ABS performance.

The Manheim Used Vehicle Value Index hit 125.3 in October, rising five consecutive months during a period which typically is the weakest of the year, according to Ftich. The index was at a high in October, consistent with January's rate. The index peak was 127.8 recorded in May 2011.

“Factors supporting used-vehicle values include a healthy new vehicle market with sales topping 18 million units (seasonally adjusted annual rate) in October, along with solid demand for used vehicles and readily available financing and low interest rates,” analysts said.

Fitch’s auto ABS indices comprise $92.2 billion in outstanding notes, of which prime auto loan ABS comprises 61 percent and subprime ABS 39 percent of that total dollar amount.