ABS Spotlight

June 20, 2017FEATURE ARTICLESABS» ABS - US: Key themes from the 2017 Moody's InvestorsService ABS Briefing3Autos & equipment» Auto ABS – US: Loan-by-loan data shed light onpotential reasons for largest subprime issuers’ differingperformance5» Ford Motor Credit Company LLC: High lease return ratessignal a credit-negative supply-demand imbalance7» Auto ABS - Global: An overview of auto securitisation9» Auto ABS - US: Sector Update - Q1 2017: Trend of weakercredit performance continues; used vehicle prices soften10Credit cards & consumer loans» Mobile phone financing ABS – US: Risks from faultydevices depend on scope of events and companies'responses12» Credit card industry – US: Spike in charge-off ratesindicates a slide in underwriting standards14» US Credit Card Index: US card charge-offs anddelinquencies lower in April16» Canadian Credit Card Index: Canadian credit card charge-offs lower in April17Student loans» Moody's Private Student Loan Quarterly Indices: Private(non-guaranteed) student loan indices stable at pre-recession levels18IN THIS ISSUE» ABS - US: Surveillance Recap: May 201719» ABS - US: ABS Toteboard: 2017 issuance levels continueto surpass 2016 in May24KEY LINKSSector Updates» Auto ABS - US: Sector UpdatePerformance indices» Prime auto ABS» Credit card ABS» Private student loan ABSQuick Check portals» ABS Quick Check» Structured financeMOODYS.COM Welcome to the June issue of ABS SpotlightIn this edition, we provide highlights of our recent ABS Briefing, including a discussion of current ABS trends and implications ofnew government policies for the ABS market. In the auto ABS sector, we discuss the findings of our initial analysis of loan-by-loandata in the subprime auto loan sector released under new Regulation AB II requirements, and we also provide an overview of autosecuritization asset types and securitization structure features globally. In the burgeoning mobile phone financing ABS sector, weexplore how risks that relate to device failures could present challenges for securitizations in some extreme scenarios and, in the creditcard sector, we discuss how rising credit card charge-off rates indicate that strong underwriting standards in place since the financialcrisis have deteriorated. These and the rest of the articles in this month’s issue will keep you informed of key credit issues affecting theUS and Canadian ABS markets. For summarized articles, click on the article links to read the reports in their entirety.This publication does not announce a credit rating action. For any credit ratings referenced in this publication, please see the ratings tab on the issuer/entity page onwww.moodys.com for the most updated credit rating action information and rating history.2 20 June 2017ABS Spotlight: June 20, 2017 ABS - US: Key themes from the 2017 Moody's Investors Service ABSBriefingFrom ABS - US : Key themes from the 2017 Moody's Investors Service ABS Briefing published on 05 June 2017Investors and other market participants in the US asset-backed securities (ABS) market attended our annual ABS Briefing on May 18at our headquarters in New York. Moody's Investors Service Managing Director William Black kicked off the event with an overviewof current ABS trends. Global Managing Director Jim Ahern then led a panel discussion on government policy under the Trumpadministration and the implications for the ABS market. In addition, we held breakout sessions with senior members of our ABS ratingteams in the auto, student loan, commercial and esoteric (C&E), and unsecured consumer loan ABS asset classes.During the panel discussion, we noted that the Trump administration has signaled its desire to radically change policy direction in anumber of key areas, including trade, immigration, taxes, health care and financial sector regulation. Although policy uncertainty willlikely remain high for some time, we said that our forecasts for accelerating GDP growth reflect an expectation of some boost from taxreform and increased government spending. We forecast GDP growth of 2.4% this year and 2.5% next year, up from 1.6% growth in2016.In terms of the impact of Trump’s policies on the ABS market, briefing attendees were divided (and many were uncertain) but leanedtoward viewing them as positive during our interactive polling involving the approximately 100 people who attended, as Exhibit 1shows. (We discussed how policy changes might affect the securitization market and other sectors in Cross-Sector – US: Trump’sElection Victory to Shift Ground on Trade, Financial Regulation, Healthcare, November 9, 2016 and in Cross Sector – US: Trump TaxBlueprint Would Raise US Debt, But Be Credit Positive for Many Sectors, May 9, 2017.)Exhibit 1Poll: For ABS markets, is the current Trump administration policy agenda...0%5%10%15%20%25%30%35%40%PositiveNegativeNeutralNot SureShare of respondentsSource: Moody's Investors ServiceAnother panelist said that the policy environment creates risks for both the US econo