Market round-up: Delinquencies in auto ABS may fall by June

In other news, cement prices in south recover sharply in April


Graphic: Naveen Kumar Saini/Mint
Graphic: Naveen Kumar Saini/Mint

Asset-backed securities (ABS) backed by automobile loans saw delinquencies rise further in February even though collections improved in that month. These securitized instruments were hit hard after demonetisation cast a shadow on the quality of auto loans. According to Moody’s Investors Service, collections have returned to pre-demonetisation levels indicating that the securitization market is back to normal. Demonetisation has weighed on economic activity in India, reducing the overall level of transportation activity and constraining the ability of commercial vehicle operators to earn an income and repay auto loans, the rating agency said in a note. Moody’s noted that delinquency rates have increased mainly due to a rise in prepayments of vehicle loans and delinquencies will reduce by June.

Cement prices in south recover sharply in April

After correcting sharply by nearly 2% on a month-on-month basis in March, as expected, cement prices in southern India have improved sharply. Factors like increased competitive intensity, sand procurement issues and water shortage in some markets of Tamil Nadu and Andhra Pradesh took a toll on demand, hurting prices. As a result, cement companies catering to that region resorted to price cuts to push volumes. A recent dealer channel check by brokerage firm Motilal Oswal Securities Ltd shows that cement prices have recovered sharply by Rs30-50/bag in April. While the average all India cement price for April increased by nearly 4% month-on-month, the price per 50kg cement bag rose 12% in south India versus March 2017.

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