Dutch RMBS has proven to be one of the rare bright spots in post-crisis European ABS, which could inspire U.S. investors to take a look at the sector, Standard & Poor’s said in a recent report.
In the first nine months of the year, Dutch RMBS issuance totaled more than €9 billion ($12.4 billion), a volume that reached nearly a quarter of all publicly-issued European ABS. Collateral performance in the sector has been solid, which has helped curb the number of downgrades over the past few years.
“This performance record through the 2008-2009 recession may mean investors see the asset class as something of a safe haven and could be one reason behind demand for Dutch RMBS,” S&P said.
The agency cited some reasons for this. For starters, the jobless rate in the Netherlands has remained low while the drop in house prices has been moderate, and fixed-rate products account for more than 80% of outstanding loans.
The most important originators of Dutch RMBS are Fortis and ABN AMRO. The chart below shows the share of the market — at least in the S&P-rated portion — by originator up to Q2 2011.
While delinquencies rose 40% between 2007 and 2010, they remained low, at below 2%. This compares favorably to the 4% posted by prime U.K. RMBS in mid 2011.
Dutch RMBS issuance should continue pick up, underpinned by economic fundamentals that are more solid that in most other European countries, S&P said.