Record Missed Car Payments Fuel Angst Over Subprime Auto Lenders

The record number of Americans falling behind on car payments is stoking concerns that more pain is in store for subprime auto lenders, following the recent high-profile collapses of Tricolor Holdings and PrimaLend Capital Partners.

The worries are showing up most clearly in the market for bonds backed by car loans, a key source of funding for lenders to higher-risk borrowers. Investors now want roughly 50 basis points of extra yield to own the lowest-rated slices of subprime auto ABS compared with two months ago, lifting average risk premiums to about 170 basis points, according to Wells Fargo & ...