New Delhi: Moody's Investors Service on Saturday said losses in auto asset backed securities (ABS) are currently low and the trend would continue in the medium term.

Moody's also found that loans from southern India show lower loss rates than other states. Moreover, 40 per cent of the total commercial vehicle borrowings backing such securities are from the south.

Its analysis is based on the performance of 70 ABS backed by commercial vehicle (CV) loans that originated between 2009 and 2016 by eight different financiers, and with a total initial pool principal amount of Rs 11,500 crore.

A majority of ABS in India are backed by CV loans.

"Our analysis shows that the Indian auto ABS loss rates are low overall, averaging 1 per cent, and is likely to remain low over the near to medium term," Moody's assistant vice-president and analyst Dipanshu Rustagi said.

In a statement, Moody's said auto ABS losses vary at different times.

Economic conditions are a a key loss driver and the performance of commercial loans is related to it, Moody's said.

The rating agency also found that higher interest rate loans are associated with higher loss, and that lenders price auto loans according to their assessment of the riskiness of borrowers.

"Loans that are at least a year old show lower loss rates compared with less seasoned loans," Moody's said. PTI