KBRA Releases Research on Auto Loan Extensions

Kroll Bond Rating Agency (KBRA) releases a research report examining the use of subprime auto loan extensions as a loss mitigation tool for ABS servicers. In general, KBRA believes the use of extensions ultimately benefits ABS investors by reducing delinquency and default rates. However, a high rate of extensions within a securitized collateral pool can meaningfully increase bond duration and expose ABS investors—particularly owners of deeply subordinated tranches—to tail risks. As such, it is important for investors to understand each servicer’s policy regarding extensions, as well as how extensions are handled within ABS deal structures.

To view the report, click here.

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About KBRA and KBRA Europe

KBRA is a full service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus, is recognized by the National Association of Insurance Commissioners as a Credit Rating Provider, and is a certified Credit Rating Agency (CRA) by the European Securities and Markets Authority (ESMA). Kroll Bond Rating Agency Europe Limited is registered with ESMA as a CRA.

View source version on businesswire.com: https://www.businesswire.com/news/home/20190222005438/en/