Though the Kerala deluge will increase short-term delinquencies in the auto loan segment, there will be no significant impact on the auto asset-backed securities (ABS) deals as a whole, says a report.
The tourist state is limping back to normalcy after a fortnight long deluge earlier this month, which devastated 13 of the 14 districts. The worst floods in a century has left over 235 people dead and thousands of homes and automobiles destroyed. Also, nearly 1.5 million were pushed out of their homes and into relief camps.
"The auto ABS deals have geographically diverse portfolios with small exposures to Kerala, meaning the floods will not cause a significant or widespread deterioration in performance at the transaction level," Moody's said in a report.
"Of the 27 outstanding auto ABS transactions that we rate, 22 had an exposure to Kerala at closing, and of these, only three had exposure of over 4 per cent to the state, with the highest exposure being 5.89 per cent at closing," the report added.
The economic disruption caused by the floods will suppress the earnings of such borrowers in Kerala for several months and a high proportion of them will default on loan repayments over the next two to three months until the situation normalises, it added.
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