Safest Auto Loan Bonds Weaken as Borrower Delinquencies Rise

Bonds tied to US prime auto loans are weakening, signaling that investors are getting slightly more worried about the strength of consumers as more borrowers fall behind on car debt payments.

Risk premiums on bonds backed by prime auto loans have climbed to their highest level in around a year, or about 1.45 percentage point above a benchmark, according to recent data from JPMorgan Chase & Co. for securities rated in the BBB tier. That compares with 1.2 percentage point at the end of February.