By Bob Tita
A survey of credit providers showed that loans and leases for
business equipment in the U.S. rose 6% in December from a year ago,
as companies staged their usual year-end rush to complete
purchases.
Respondents to the Equipment Leasing and Finance Association's
monthly survey published Thursday said they financed a record $11.5
billion of new equipment last month, up from $10.8 billion in the
year-earlier period. For the year, business volume rose 14% over
2011 to $84.4 billion.
December is typically the busiest month of the year for
financing, as companies complete budgeted purchasing programs of
equipment that were delayed earlier in the year. Buying also was
likely driven by anxiety that federal tax depreciation rates on new
capital equipment would fall significantly under the so-called
fiscal cliff that would have raised taxes and cut government
spending. A last-minute agreement between President Barack Obama
and Congress headed off implementation of higher taxes and spending
cuts.
But observers say demand for capital equipment is likely to
continue to be affected by concerns about a political showdown over
federal debt early this year.
"Pressure on the U.S. economy--notably the still-unresolved
debt-ceiling and mandatory spending reduction debate between
Congress and the White House--continues to overhang the U.S.
economy," said William Sutton, president of the Washington-based
equipment leasing association.
Credit-portfolio quality measured by the survey were slightly
mixed in December. Loans and leases past due by more than 30 days
dropped to their lowest level in two years at 1.6% of survey
respondents' net receivables in December, down from 2.1% in
December 2011 and 2% in November.
Charge-offs amounted to 0.6% of respondents' net receivables
last month, down from 0.7% a year earlier, but up from 0.5% in
November. The approval rate for loan and lease applications was
78.5% in December, compared with 79.3% a year earlier and 77% in
November. Survey respondents cited construction, trucking and
aircraft as industry sectors within their loan portfolios that are
underperforming.
The 25 respondents to the association's survey included banks
Wells Fargo & Co. (WFC), Bank of America Corp. (BAC) and Fifth
Third Bancorp (FITB), as well as finance units for manufacturers
Caterpillar Inc. (CAT), Deere & Co. (DE), Volvo Group and Dell
Inc. (DELL).
Write to Bob Tita at robert.tita@dowjones.com