Moody's Talks - Securitization Spotlight

As borrowing costs continue to rise and consumers’ purchasing power wanes, borrowers’ ability to make debt payments is weakening. What makes auto ABS among the securitization sectors most vulnerable to this deterioration in consumers’ finances? And what does the sector’s ongoing transition to electric power mean for transactions we rate?

Guests: Maxwell Price, Analyst – Structured Finance Group, Moody’s Investors Service; and Robin Liu, Vice President – Structured Finance Group, Moody’s Investors Service

Host: Aaron Johnson, Vice President – Research, Moody’s Investors Service

To read more on this topic, visit Securitization Spotlight page on Moodys.com (some content only available to registered users or subscribers).

• Auto-related ABS – US: Slower used auto price drops will ease asset risks; trends for BEV values are less certain
• Auto ABS – US: Worsening performance among non-prime borrowers will strain junior note protection
• UK Auto ABS – Europe: Auto sector transformation spreads to used car market, a credit negative for auto ABS

European small and medium-sized enterprises, and in turn securitizations backed by their debt, remain among the most vulnerable borrowers as the COVID-19 pandemic has given way to Ukraine War-driven economic uncertainty over the past year. With the war still raging and economies weakening, where are some of the biggest risks in the sector? And what kind of mitigants do ABS structures provide?

Guests: Monica Curti, Vice President – Structured Finance Group, Moody’s Investors Service.

Host: Aaron Johnson, Vice President – Research, Moody’s Investors Service.

To read more on this topic, visit Securitization Spotlight page on Moodys.com (some content only available to registered users or subscribers).

Rising rates and a deteriorating macroeconomic environment will make it more difficult for commercial real estate borrowers to refinance, but some will have more difficulty than others. 

Guests: Darrell Wheeler, Vice President – Moody’s Investors Service

Host: Aaron Johnson, Vice President – Research, Moody’s Investors Service

To read more on this topic, visit these reports on Moodys.com (some content only available to registered users or subscribers).

• Higher interest rates will subdue post-pandemic 2023 recovery for commercial real estate
• CMBS and CRE CLOs – US: 2023 Outlook - Higher rates and slower economy pose risks to new deal credit quality and existing deal performance

With the global economy on the verge of a downturn amid extraordinarily high levels of uncertainty, the performance of assets backing structured finance transactions will weaken in 2023. But erosion will not be distributed evenly across markets.

Guests: Annabel Schaafsma, Managing Director – Global Structured Finance, Moody’s Investors Service

Host: Aaron Johnson, Vice President – Research, Moody’s Investors Service

To read more on this topic, visit Securitization Spotlight page on Moodys.com (some content only available to registered users or subscribers).

Interest rate hikes in many regions have slowed home price growth, but even where prices have started to decline, affordability remains strained. What are the implications for mortgage-backed securities, particularly for transactions backed by mortgages originated in the past year, when home prices were peaking?

Guests: Rodrigo Conde Puentes, Vice President – Structured Finance Group, Moody’s Investors Service, Sonny Weng, Vice President – Structured Finance Group, Moody’s Investors Service, and Ilya Serov, Associate Managing Director – Structured Finance Group.

Host: Aaron Johnson, Vice President – Research, Moody’s Investors Service.

To read more on this topic, read these reports on Moodys.com (some content only available to registered users or subscribers).

• Rising interest rates and inflation are eroding housing affordability in many Asia-Pacific countries
• Housing – Europe: Risks grow across sectors along with likelihood of housing downturn 
• RMBS – US: Sector update – Q3 2022: Prime jumbo issuance drops, performance stays healthy

Collateralized loan obligation portfolios and structures are always evolving, changing along with the credit environment. But since the pandemic set in, how have US and European deals continued to converge, and in what ways have they gone in their own directions? Meanwhile, how has the CLO manager landscape changed in each region?

Guests: Shan Lai, Vice President – Structured Finance Group, Moody’s Investors Service, and Ian Perrin, Associate Management Director – Structured Finance Group, Moody’s Investors Service.

Host: Aaron Johnson, Vice President – Research, Moody’s Investors Service.

To read more on this topic, visit Securitization Spotlight page on Moodys.com (some content only available to registered users or subscribers).

The harmonization of covered bond laws across the EU will benefit bank issuers, transactions and investors alike. Meanwhile, with inflation heightening risks in many structured finance markets, covered bonds continue to benefit from the relatively strong credit quality of their bank issuers. How big of a deal is harmonization and what types of loans will it affect? Are there any holes in the new, unified framework?

Guests: Alexander Zeidler, Vice President – Structured Finance Group, Moody’s Investors Service, and Niclas Boheman, Vice President – Structured Finance Group, Moody’s Investors Service.

Host: Aaron Johnson, Vice President – Research, Moody’s Investors Service.

To read more on this topic, visit Securitization Spotlight page on Moodys.com (some content only available to registered users or subscribers).

The performance of auto-related asset-backed securities we rate in the US and Europe will normalize in the coming months as auto prices flatten out and macroeconomic factors such as inflation weigh on consumers. How do both used and new auto price movements affect ABS? Will supply disruptions persist into 2023? And how much will rising interest rates affect transactions backed by auto loans and leases?

Guests: Karen Ramallo, Associate Managing Director – Structured Finance Group, Moody’s Investors Service, and Greg O’Reilly, Vice President – Structured Finance Group, Moody’s Investors Service.

Host: Aaron Johnson, Vice President – Research, Moody’s Investors Service.

To read more on this topic, visit Securitization Spotlight page on Moodys.com (some content only available to registered users or subscribers).

Description: With loan-level delinquencies on the decline, the performance of CMBS in both the US and Europe is healthy. But some sectors are drawing extra attention in the wake of the pandemic. How much of the retail sector’s recent struggles are attributable to the pandemic and how much are a continuation of the ongoing trend away from bricks and mortar? Which property types are best positioned as inflation continues to rise?

Guests: Matt Halpern, Vice President – Structured Finance Group, Moody’s Investors Service, and Brian Snow, Vice President – Structured Finance Group, Moody’s Investors Service.

Host: Aaron Johnson, Vice President – Research, Moody’s Investors Service.

To read more on this topic, visit Securitization Spotlight page on Moodys.com (some content only available to registered users or subscribers).

Investors across markets are increasingly taking ESG factors into consideration. The structured finance world is no stranger to these efforts and their impact on transaction credit quality. To what extent have investor preferences and regulations driven changes to the structured finance market in recent years? And how is The Netherlands an example of how flooding risk factors into real estate collateral considerations?

Guests: Antonio Tena, Vice President – Structured Finance Group, Moody’s Investors Service, and Johann Grieneisen, Vice President – Structured Finance Group, Moody’s Investors Service.

Host: Aaron Johnson, Vice President – Research, Moody’s Investors Service.

To read more on this topic, visit  Securitization Spotlight  page on Moodys.com (some content only available to registered users or subscribers).