Moody's Investors Service says that the performance of the securitization markets of India (Baa3 positive), Korea (Aa2 stable) and Singapore (Aaa stable) will be stable in 2017, with good credit quality across most asset classes.
"In India, robust growth and low oil prices will underpin stable auto ABS performance, despite the economic disruption from the country's demonetization," says Yian Ning Loh, a Moody's Senior Vice President.
"In Korea, low unemployment and interest rates will keep credit card ABS delinquencies low, while covered bond credit quality will also remain strong in both Korea and Singapore," adds Loh.
Moody's conclusions are contained in its just-released 2017 outlook for the sector, titled "Structured Finance -- India, Korea and Singapore: 2017 Outlook -- Performance Stable, Credit Quality Good Across Most Asset Classes".
Moody's expects the performance of Indian commercial vehicle (CV) loans backing auto asset-backed securities (ABS) transactions to remain stable. Delinquency rates will increase somewhat in the very short term owing to the Indian government's decision to withdraw INR500 and 1,000 notes. However, delinquencies should return to their current levels over the course of 2017, owing to robust economic growth and low oil prices.
Moody's also expects new Indian auto ABS issued in 2017 will have good credit characteristics.
Residential mortgage performance should also remain strong in 2017, with low delinquencies reflecting low interest rates, steady house prices and stable prepayment rates.
In Korea, delinquency rates for credit card receivables were low in 2016, and should remain low in 2017. The credit quality of new credit card ABS deals issued in 2017 will also be good, says Moody's.
The credit quality of new and outstanding Korean covered bonds will also be strong and stable in 2017, supported by the high credit quality of the issuers and the country's sovereign strength. The credit quality of the collateral will also be good.
Finally, the credit quality of new and outstanding Singaporean covered bonds will be strong and stable in 2017, supported by the credit quality of the bank issues, which remains high despite our negative outlooks on the major Singaporean banks, and the country's sovereign strength. The credit quality of the collateral will also be good.


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