Securities Backed by Credit Card, Auto Loans Poorest Performers

Bonds and corporate securities backed by credit card debt, auto loans and commercial mortgages were the worst performers in the debt markets in August, according to data released by Lehman Brothers.

Asset-backed securities backed by credit card accounts, car loans and residential mortgages lost 1.17 percent last month. Commercial mortgage- backed securities lost 0.82 percent in August.

“There doesn't appear to be a levee high enough to contain the spread of consumer credit risk,” Jim Vogel, an analyst at FTN Financial Group in Memphis, Tennessee, wrote in a note to clients Tuesday, according to Bloomberg News.

Delinquency rates on loans in auto asset-backed securities rose in each of the first six months of the year, compared with the same periods in 2007, according to Moody’s data.

More than $358 billion of credit card asset-backed securities were outstanding as of March 31, according to the Securities Industry and Financial Markets Association. Another $196.6 billion in securities were backed by auto loans.