Fitch Ratings revised its outlook for a number of European structured finance sectors as the global economic downturn continues to weigh on the performance of securitization transactions in the region.
Lower interest rates have positively impacted RMBS mortgage arrear but the rates have done little to help consumer and auto loan securitization, which are primarily fixed-rate structures. Fitch believes the trend of performance in most consumer related asset classes will therefore remain closely linked to unemployment trends.
"Restricted access to credit is negatively affecting the ability of consumers to service and refinance their secured and unsecured debt and in turn reduces the level of prepayments in a number of structured finance sectors, which is a significant driver of build-up in credit enhancement," said Lara Patrignani, senior director in Fitch's European structured finance team. "Overall ratings momentum remains negative for many structured finance sectors across much of Europe and emerging economies. However, Fitch continues to expect that negative rating actions will be largely confined to the junior classes of these transactions."