Monthly Overview
KBRA’s headline Equipment Loan and Lease ABS index showed generally stable to slightly improved credit performance in July, with annualized net losses rising modestly month-over-month (MoM), while delinquency rates moved lower. Annualized net losses increased 8 basis points (bps) MoM and 55 bps year-over-year (YoY), landing at 1.13%. The MoM rise in net losses was driven by increases in both of KBRA’s sub-indices, but primarily by the Large Ticket sub-index, which jumped 12 bps MoM, while the Small-Medium Ticket sub-index ticked up only 2 bps. The Large Ticket’s MoM net loss rate deterioration was largely driven by one deal that had posted negative losses last month due to larger-than-typical recoveries. This month-to-month variability in recoveries is common for Large Ticket deals due to certain underlying collateral types (typically trucking), where recoveries tend to lag charge-offs. The YoY net loss metric is similarly affected by this variability, though it should…