It cautioned that the asset quality stress will continue at least for the next two quarters.
"Delinquencies of CV loans rose to 3 per cent in the September quarter from 2.4 per cent a year ago," India Ratings said in a note.
The agency warned that it does not expect any reprieve in the next two quarters as its early delinquency index rose to a high of 8.2 per cent during the reporting period from 6.5 per cent y-o-y, suggesting deterioration in asset quality has not yet bottomed out.
The agency, however, said this is in line with its stable-to-negative outlook for CV loans for this year as transactions continue to have stable outlook due to availability of excess interest spread, sufficient credit enhancement levels and fully amortising nature of underlying loans.
Noting that vintage (long maturities) CV loans defaulted faster than other vintages in the year, it said for 2013 vintage pools, the 90+days delinquencies more than doubled to 3.2 per cent in the reporting period from 1.45 per cent. Such delinquencies were 2.6 per cent and 1.9 per cent in the corresponding quarters in 2012 and 2011.
Stating that the asset-backed securitisation deals are showing some reversal of established trends, the report said "in recent times, the performance of loans at loan-to-values is over 80 per cent and new CV loans has deteriorated compared to lower LTV and used CV loans.
"This indicates that even credit worthy borrowers may not remain insulated in times of economic slowdown."
Construction equipment loans also showed signs of stress recording a new delinquency peak of 3.4 per cent from 1.5 per cent y-o-y, largely contributed by 2012 vintage loans.
However, the report said the rise in delinquencies has not resulted in any negative rating actions, mainly due to substantial credit enhancement build-up.
The recent positive sentiments reflected by a 3.3 per cent y-o-y rise in the mining index may cushion transactions from further rise in delinquencies, the report added.