The share of subprime borrowers at least 60 days behind on their auto loans rose to 6.65% in October, the highest level on record, according to Fitch Ratings data going back to the early 1990s. Subprime borrowing refers to lending to consumers with lower credit scores or limited credit histories, who are considered higher risk and typically charged higher interest rates to offset the increased likelihood of default. PrimaLend, which serves the "buy-here-pay-here" auto financing market — where dealers sell and directly finance vehicles for customers with poor or limited credit — filed for bankruptcy protection last month. Tricolor, which sold cars and provided auto loans mostly to low-income Hispanic communities in the Southwestern United States, also filed for bankruptcy in September. A further deterioration in credit quality could weigh on lenders, especially at a time when investors are highly sensitive to signs of stress in loan portfolios . High borrowing costs, rising living expenses and shrinking savings are squeezing household budgets, leaving subprime borrowers increasingly vulnerable. Rising subprime auto delinquencies are emerging as a clear sign of mounting stress in the credit market , as many lower-income Americans struggle to keep up with payments. Subprime auto loan delinquencies, where borrowers have gone at least 60 days without making a payment, rose to 6.65% in October, up from 6.50% in September and 6.23% a year earlier, according to Fitch Ratings data. For prime borrowers, those with stronger credit histories, the rate held steady at 0.37%, unchanged from both the previous month and a year ago, indicating they remain largely shielded from the financial strain affecting lower-income consumers.

U.S. auto parts maker First Brands filed for bankruptcy protection on Monday after disclosing liabilities exceeding $10 billion, marking the collapse of a company whose rapidly deteriorating finances have shocked debt investors in recent weeks. First Brands is expected to soon disclose an issue with its factoring arrangements amounting to nearly $2 billion, according to people familiar with the matter. The company's board and creditors are investigating the issue, one of these people said, confirming an earlier report in the Wall Street Journal. Factoring is a financing method that is tied to the future revenue of a company. The company, whose fortunes unraveled in recent weeks as it grappled with a debt pile from a flurry of acquisitions over the past few years, has obtained $1.1 billion in debtor-in-possession financing from its first-lien lenders to support ongoing operations, it said in a statement. Financial troubles at the auto parts supplier, coupled with the recent bankruptcy of subprime auto lender Tricolor Holdings, have rattled debt investors and stoked fears of broader stress in corporate debt markets, according to bankruptcy experts . The high-profile collapse of First Brands has raised questions among investors about potential ripple effects across the automotive parts industry, although experts said automaker supply chains are not likely to be affected broadly since First Brands is primarily an aftermarket parts provider. Ohio-based First Brands, which is owned by businessman Patrick James, said that its Chapter 11 cases pertain solely to U.S. operations, and expects its global operations to continue uninterrupted. In its Chapter 11 petition, First Brands estimated liabilities in the range of $10 billion to $50 billion, while its assets were estimated at between $1 billion and $10 billion. Bankers and creditors had been racing to restructure First Brands' debt as investor confidence eroded leading up to the filing, with several of its associated companies also declaring bankruptcy. Privately held First Brands, which makes replacement components including filters, brakes and lighting systems for the automotive aftermarket, emerged as a significant player in the industry through debt-financed acquisitions of rival auto parts makers. Its well-known brands include Raybestos brake solutions, TRICO wiper blades, and FRAM filtration products. Last week, ratings agency Fitch downgraded First Brands' credit rating, saying the company's options for managing its debt were increasingly limited to off-market solutions. Asset manager Apollo Global Management and investment firm Diameter Capital Partners had amassed a short position against the company's debt earlier in September. Both firms have now closed their bets against First Brands' loans. Article credit from Reuters.com

Sunnova Energy said on Sunday it had filed for Chapter 11 bankruptcy protection in the United States, as the residential solar panel installer buckled under the pressure of mounting debt and weakening demand. Shares were down 36.4% at 14 cents in premarket trading. Sunnova filed for protection in the Bankruptcy Court for the Southern District of Texas after warning in March that it might not be able to continue as a going concern. The company listed its estimated assets and liabilities in the range of $10 billion to $50 billion and has a total debt of $10.67 billion as of December 31, according to a court filing. Sunnova said last week it would lay off about 55% of its workforce, or 718 employees, in a bid to cut spending. Earlier this month, its unit, Sunnova TEP Developer, had also filed for Chapter 11 bankruptcy protection. The company’s bankruptcy filing comes at a time when the U.S. residential solar energy industry is under immense pressure from higher interest rates; a reduction in incentives in the top market, California; and fears of subsidy rollbacks for clean energy. President Donald Trump’s administration, which is pushing to maximize oil and gas production, canceled a partial loan guarantee of $2.92 billion last month that was awarded to Sunnova by the Biden administration. Last year, peer SunPower, once a pioneer of the U.S. residential solar market, also collapsed following a subpoena from the U.S. Securities and Exchange Commission about its accounting practices and the departure of its CEO.  Companies that put solar panels on U.S. homes said last month a Republican budget bill that has advanced in Congress could deal a massive blow to the industry by eliminating a generous subsidy for homeowners that had buttressed the industry’s growth.