Fitch: Delinquencies on U.S. Construction Equipment ABS Hit a Historical High

According to Fitch Ratings, delinquencies on U.S. Construction Equipment ABS has reached a historical high. The firm said the heavy metal portfolio has matched an historical high, with 60+ day asset-backed securities (ABS) delinquencies at 1.87% as of March 2009, which was last experienced in March 2000. The heavy metal portfolio is comprised of leases and loans on construction and agricultural equipment.

The firm said the portfolio continued to experience more pronounced deterioration than other equipment types, primary due to the weak real estate sector.

Fitch said, "although both the small/mid-ticket and heavy metal portfolios have experienced asset deterioration in 2009, overall transaction specific performance across both portfolios remains within Fitch's expectations and sufficient credit enhancement exists. Therefore, minimal ratings volatility is expected."

This news could be viewed as a negative for construction equipment makers like Caterpillar Inc. (NYSE: CAT), Terex Corp. (NYSE: TEX), Deere & Co. (NYSE: DE), Manitowoc Co. Inc. (NYSE: MTW), among others.

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