The use of extensions on subprime auto ABS more than doubled in April on a monthly basis. The outlook for performance is uncertain with enhanced unemployment benefits set to end in July.

The performance of ABS from marketplace lenders could take a harder hit from the pandemic than other types of MBS and ABS, said Fitch.

Servicers of loans in auto ABS increased their use of loan extensions in March to help borrowers struggling to make payments.

Rating services anticipate the sharp rise in the unemployment rate brought on by the pandemic will damage borrowers’ ability to repay loans.

The performance of MBS and ABS looks likely to suffer, with delinquencies projected to increase and rating downgrades a possibility.

Issuance of non-agency MBS and ABS is still being completed, but at a slower pace. Spreads have widened for new deals along with trading in the secondary market.

Coronavirus-related risks for certain industries represent a significant danger to the U.S. collateralized loan obligations market, but diversification and liquidity buffers may help absorb the immediate impact.

The Federal Reserve’s 2020 stress tests will examine certain large banks’ ability to weather severe shocks in the leveraged lending market.

JPMorgan Chase has issued its first ABS transaction backed by credit card receivables through Chase Issuance Trust since May 2018. A wildcard to the deal, however, is a pending lawsuit involving the issuance trust.

Issuance of aircraft-related ABS is expected to shoot up in the coming years but industry analysts are warning about potential performance issues. Fitch said it’s taking a cautious approach to rating new deals.