London, 10 July 2009 -- Report covers RMBS, CMBS and ABS only. The sector outlook for almost all Residential Mortgage-Backed Securities (RMBS), Commercial Mortgage-Backed Securities (CMBS) and Asset-Backed Securities (ABS) structured finance asset classes in Europe, the Middle East and Africa (EMEA) remains negative, Moody's Investors Service says in a new Special Report. The rating agency's expectation is that further quarters of GDP contraction and rises in unemployment in all the countries covered in this study lie ahead and that asset performance will continue to react to macroeconomic trends with a delay.

"Moody's sector performance outlooks for RMBS, ABS and CMBS in the EMEA region remain unchanged from our previous update in January 2009. The only asset class without a negative outlook is Turkish Diversified Payment Rights, which has a stable outlook," explains Nitesh Shah, a Moody's Economist and author of the report. Moody's believes it is too soon to change the negative performance outlooks on most segments and cautions that, in the event of a slow recovery, asset performance trends could still prove disappointing even amid a steady pickup in macroeconomic conditions.

"The rating implications of the negative performance outlooks vary depending on the structural features of transactions and headroom within existing rating assumptions. The diverse nature of individual transactions means that broad generalisations of rating implications are difficult to make," Mr Shah notes. However, Moody's report provides some commentary on cases where the rating agency believes the negative performance pressure is likely to translate into negative rating pressure.

Since Moody's previous update, the negative performance outlooks in certain sectors have been reflected in actual rating downgrades on certain transactions. Although some downgrades had been prompted by a change in Moody's methodology, the downward pressure on the ratings in question ultimately reflected a deterioration in performance combined with an improved mechanism to capture the deterioration.

Given the level of uncertainty that persists, those sectors that have already undergone formal reviews and have had rating upgrades or downgrades as a result are not necessarily exempt from experiencing further rating changes. Moody's is continually assessing macroeconomic developments and asset performance and will comment on its views in its regular index reports.

To provide the reader with some differentiation between the negative outlooks, Moody's report -- entitled "EMEA RMBS, ABS & CMBS Asset Performance Outlooks, July 2009" -- presents some comments on each of the sectors, which should be viewed as an aid to broadly place the performance in relative terms, although a neat comparison of different assets and countries is inherently impossible. For example, Moody's believes that the negative performance pressure on Spanish SME ABS, Spanish RMBS, EMEA CMBS, and UK Non-Conforming RMBS is far more acute than that on Dutch or French RMBS.

- Ends -

Editor's notes
CREDIT RATINGS ARE MIS'S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES. MIS DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL, FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED

TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. CREDIT RATINGS DO NOT CONSTITUTE INVESTMENT OR FINANCIAL ADVICE, AND CREDIT RATINGS ARE NOT RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. CREDIT RATINGS DO NOT COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MIS ISSUES ITS CREDIT RATINGS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.

Copyright 2009, Moody's Investors Service, Inc. and/or its licensors and affiliates including Moody's Assurance Company, Inc. (together, "MOODY'S").

All rights reserved.

ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY COPYRIGHT LAW AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY'S PRIOR WRITTEN CONSENT. All information contained herein is obtained by MOODY'S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, such information is provided "as is" without warranty of any kind and MOODY'S, in particular, makes no representation or warranty, express or implied, as to the accuracy, timeliness, completeness, merchantability or fitness for any particular purpose of any such information. Under no circumstances shall MOODY'S have any liability to any person or entity for (a) any loss or damage in whole or in part caused by, resulting from, or relating to, any error (negligent or

otherwise) or other circumstance or contingency within or outside the control of MOODY'S or any of its directors, officers, employees or agents in connection with the procurement, collection, compilation, analysis, interpretation, communication, publication or delivery of any such information, or any direct, indirect, special, consequential, compensatory or incidental damages whatsoever (including without limitation, lost profits), even if MOODY'S is advised in advance of the possibility of such damages, resulting from the use of or inability to use, any such information. The credit ratings and financial reporting analysis observations, if any, constituting part of the information contained herein are, and must be construed solely as, statements of opinion and not statements of fact or recommendations to purchase, sell or hold any securities. NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY SUCH RATING OR OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY'S IN ANY FORM OR MANNER WHATSOEVER. Each rating or other opinion must be weighed solely as one factor in any investment decision made by or on behalf of any user of the information contained herein, and each such user must accordingly make its own study and evaluation of each security and of each issuer and guarantor of, and each provider of credit support for, each security that it may consider purchasing, holding or selling. MOODY'S hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial

paper) and preferred stock rated by MOODY'S have, prior to assignment of any rating, agreed to pay to MOODY'S for appraisal and rating services rendered by it fees ranging from $1,500 to $2,400,000. Moody's Corporation (MCO) and its wholly-owned credit rating agency subsidiary, Moody's Investors Service (MIS), also maintain policies and procedures to address the independence of MIS's ratings and rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold ratings from MIS and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually on Moody's website at www.moodys.com under the heading "Shareholder Relations - Corporate Governance - Director and Shareholder Affiliation Policy."

Moody's Investors Service Pty Limited does not hold an Australian financial services licence under the Corporations Act. This credit rating opinion has been prepared without taking into account any of your objectives, financial situation or needs. You should, before acting on the opinion, consider the appropriateness of the opinion having regard to your own objectives, financial situation and needs.

© Press Release 2009

 

Community Comments (0) - Comment on this article

The opinions of the authors expressed herein do not necessarily state or reflect Zawya. Read our Comment Policy.

 

 

 

close x

Loading ...

 

close x

Report Abuse

Loading ...

 

 

close x

Loading ...