The performance outlooks for ABS and RMBS in Europe, the Middle East and Africa (EMEA) are Negative, said Moody's Investors Service in its 2009 Review & 2010 Outlook report for both asset classes.

The Negative outlooks are based on rising unemployment rates as well as insolvency rates, which will likely remain at high levels over 2010.

In its review of the year, Moody's noted that the fallout from the credit crunch continued to severely affect securitizations throughout last year. The number of ABS and RMBS rating downgrades rose to 741 in 2009 compared with 408 in 2008, largely as a result of poor collateral performance.

Over two-thirds of the downgrades for RMBS were in Spain and the U.K. nonconforming sectors, while over 50% of the ABS downgrades were linked to the ABS of SME sector and largely due to the update of the ABS SME methodology.

Moody's believes that rating pressure ratings migrations are still expected in 2010, especially on the 492 tranches currently on review for downgrade, which include significant exposures to Spanish and U.K. nnconforming RMBS, ABS of SME and Spanish consumer loans.

However, Moody's also noted in most recent performance indices some early signs of performance stabilization in certain consumer asset sectors.

Subscribe Now

Access to a full range of industry content, analysis and expert commentary.

30-Day Free Trial

No credit card required. Access coverage of the securitization marketplace, including breaking news updated throughout the day.