2018 Outlook : India Auto ABS

Hong Kong/Sydney: Fitch Ratings has a stable outlook on all structured finance ratings (except for two) in Asia-Pacific. Economies across the region remain robust: we expect GDP growth to stay strong and unemployment rates to remain low throughout the region in 2018, says Fitch in a report published today. The ratings outlook and the sector outlook are unchanged from last year. Two ratings are currently on Rating Watch Positive, following an increase in the maximum notch uplift for China.

We expect arrears levels, defaults and losses to rise marginally on the back of lower property-price appreciation but to remain low and stable across the region. Our expectation is that payment rates will remain healthy, allowing a continued build-up of credit enhancement, where transaction structures permit.

We expect property-price appreciation in Sydney, Melbourne and Tier 1 cities in China to be subdued throughout 2018. Only small price rises are likely in Australia as incomes fail to keep pace with the cost of living; lending standards remain tight; the supply of real estate increases; and the Reserve Bank of Australia is unlikely to raise rates in the medium term. Fitch believes Chinese government policies remain flexible enough to either loosen or tighten the housing market to meet its economic development objectives.

Fitch's rating and sector outlooks will remain stable unless regional economies suffer major shocks. Risks of deteriorating performance in consumer assets across the region would arise from either a rapid jump in interest rates or a significant rise in unemployment. Neither of these scenarios form part of our expectations for 2018.

The report, "Fitch 2018 Outlook: Asia-Pacific Structured Finance", is available at www.fitchratings.com or by clicking on the link in this release.