Fitch IBCA recently announced that it will rate Japanese servicers for asset-backed transactions, in response to the rapid growth of the domestic securitization market.
The agency will rate the experience and quality of residential and commercial mortgage servicers, as well as servicers for deals backed by performing and non-performing assets. A five-point rating scale based on Fitch's standardized benchmarking methodology will let investors compare a servicer's capability both globally and within Japan, though the ratings will be assigned in the context of the domestic market and subject to Japanese laws.
Fitch is the second agency to introduce Japanese servicer rankings, after Standard & Poor's Ratings Services announced a similar service in September. Servicing, once a non-essential part of Japanese securitizations, has been gaining importance as domestic investors have realized the risk of seller bankruptcy. It is also a growing business for financial institutions, after a servicer law was passed in April allowing a wider range of entities to perform servicing.