New issues of ABS or the asset –backed securities which is backed by auto loans is considered as the primary reason for the slump of the non-mortgage ABS market after the credit crisis seen in the year 2008-2009 .
According to reports submitted by Thomson Reuters SDC and IFR Markets, the Year to date the total volume of American ABS is in the tune of 61.4 billion US dollars. A total of 56.6% or 34,7 billion of US dollars worth of that issuance was due to auto related activities or automobiles .
The Auto-loan bond sector of the US had bounced back nicely seen in the last four years.
New issue supply of Auto ABS amounted to 36,4 billion US dollars in 2008. In 2007 it was very strong and amounted to 82.3 billion US dollars. In 2005 the pre crisis issuance reached its zenith and touched 103.1 billion US dollars. It was 96.3 billion Us dollars in the year of 2006.
In the Year 2009 the crisis saw an improvement when the New York Federal Department took the initiative and instituted a program called TALF or Term-Asset Backed Securities Loan Facility.
This program was brought in for increasing the credit availability and for supporting economic activities by renewing issuance of consumer and business ABS at more normal rate of interest. Any Eligible borrower having eligible collateral was given non-recourse funding by the New York Federal Department.
Due to the introduction of this TALF program the auto ABS volume numbers improved in the year s 2010 and 2011 and reached the sum of 57.1 billion US dollars and 66.5 billion US dollars respectively. As the start was very fast this year The Analysts at Barclays for ABS raised their estimates on auto ABS from 65 billion -70 million US dollars to 82.5-87.5 billion US dollars.
On Top of this the bank ha also raised its estimate on total ABS volume from 100-115 billion US dollars to 125-140 Billion US dollars.
Bank of America Merrill Lynch‘s Strategists also revised upward their forecast taking it to 100 billion US dollars from 80 billion US dollars.