The increased use of personal contract purchase (PCP) agreements is putting pressure on UK auto ABS, suggests DBRS. While the rating agency does not think deals will be negatively affected in the short term, the trend is worth monitoring.
DBRS has rated 15 UK auto ABS since 2010 and finds the correlation between new car registrations and prepayment rates, as well as the increasing weight of PCP agreements, reinforces the role of captive auto finance lenders in supporting new car sales growth.
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