The dramatic drop in oil prices since 2014 will benefit most asset classes in the US asset-backed securities market, although there will be a negative impact on some sectors, similar to the impact that the oil price declines will have on the U.S. economy at large.
Moody’s Investors Service says that, in general, cheaper gasoline puts more money in consumers’ pockets, providing a broad, if slight, uplift to securitizations backed by unsecured consumer receivables such as student loans and credit cards.
The decline in oil prices will have a mixed credit impact on auto-related securitizations. Consumers will have more money in their wallets, which will help them keep up their payment obligations on auto loans and leases.
However, a shift in demand toward less-fuel efficient vehicles in a low oil price environment could have a negative effect on several auto-related sectors, if gas prices jump significantly.
As for MBS and RMBS, apparently it will have no effect.
In auto lease ABS, this could cause a decline in asset values when lessees turn in the less fuel-efficient vehicles at the end of their contracts, and in floorplan ABS, payment rates could slow temporarily as dealers reduce their inventory of less fuel-efficient vehicles.
In commercial and esoteric ABS, the aircraft and container ABS sectors will benefit from increased profits to their lessee bases resulting from lower fuel costs. However, lower oil prices will have a negative effect on rail car and fleet lease ABS, as well as select deals in the equipment ABS sector as a result of exposure to the oil industry.