China's (Aa3, negative) economic slowdown has a spillover effect on Asia Pacific economies, which can in turn negatively affect the performance of the assets backing securitisation deals in those markets, warns Moody's Investors Service. The impact will vary by country, but will be generally limited. "We expect a slight increase in delinquency rates for the underlying loans in Chinese auto ABS transactions, given the slowdown in China's GDP growth," says Moodys' analyst Marie Lam in a report released yesterday."In Australia, China's slowdown will show a moderately negative impact on the performance of ABS, and to a lesser extent, RMBS, Nevertheless, overall, delinquencies will remain low because of the good loan attributes," Lam adds. Moody's report points out that China's slowdown has weighed on the Australian commodities sector. The end of the mining investment cycle has caused unemployment to increase in resource states such as Western Australia and, to a lesser extent, Queensland.This situation is in contrast to New South Wales and Victoria, where the employment market has benefited from a weaker Australian dollar, caused by the decline in commodity prices. "Transactions with collateral concentrated in the resource states will be more negatively impacted than those in New South Wales and Victoria," the Moody's report notes.