Ind-Ra: Commercial Vehicle Loans Recovering; Construction Equipment Loans Not

Commercial vehicle loans may finally be on the path to recovery, says India Ratings and Research (Ind-Ra). This is based on Early Delinquency Index (EDI) falling to 7.19% in February 2015 from 8.05% in February 2014. Transactions securitised in 2014 have also shown a better performance with initial 90+ days past due (dpd) delinquencies being on a lower gradient than that seen in 2013 vintage transactions.

Construction equipment loans remain stressed due to the slow growth rate in the mining and infrastructure sectors. In February 2015, weighted average (WA) 90+dpd delinquency rose sharply to 4.94% from 3.23% in February 2014. Higher delinquencies were observed in 2013 and 2014 vintages with WA 90+dpd delinquencies reaching to 5.36% and 4.50% in February 2015, respectively. However, no negative rating actions have been taken due to the availability of excess interest spread and sufficient credit enhancement levels.

WA 180+dpd delinquencies for tractor loans also increased to 3.79% (WA amortisation of 78.16%) in February 2015 from 2.98% (WA amortisation: 57.0%) in March 2014. However, negative rating actions were not taken and also are unlikely to be taken given the significant amortisation and available credit protection.

A stable performance was observed in Ind-Ra rated mortgage loans. 2014 vintage transactions kept performing better than all other vintages with no loans moving to 60+dpd delinquency buckets.

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