Fitch Ratings expects to revise the rating outlook to negative for certain U.S. structured finance ratings. This is a result of the change in the U.S. sovereign’s rating outlook to negative from stable.
The rating agency said that it will revise the outlook on transactions that benefit from guarantees or insurance from the U.S. government or related entities.
Outlook revisions will affect up to 1500 classes of student loan ABS, that were mainly originated under the Federal Family Education Loan Program (FFELP).
The principal and interest due on each FFELP loan is at least 97% guaranteed by the U.S. Department of Education, which carries the full faith and credit of the U.S. government.
In the RMBS sector, up to 100 classes guaranteed or insured by the government sponsored enterprises Fannie Mae, Freddie Mac and the Federal Housing Administration.
In the structured credit sector, up to 50 classes are credit-linked to the U.S. government, like those securitized by the National Credit Union Administration where principal and interest is ultimately guaranteed by the credit union agency.
In CMBS, a small number of transactions include classes that might be significantly defeased with U.S. Treasury strips.
Fitch will review these transactions on a case by case basis considering mitigants such as time to maturity to determine if an Outlook revision is warranted.