Adverse economic conditions are continuing to weigh on asset performance in Spanish securitizations backed by loans to small and medium-sized enterprises (SME ABS), Moody’s Investors Service said in a report.
Despite some recent stabilization in delinquencies, SME deal, specifically those transactions most exposed to the real estate market, are now suffering severely.
"The recession in Spain extended further in [3Q09] and a further weakening is anticipated, especially in the labour market,” said Nitesh Shah, a Moody's economist. “Although a return to growth is expected in Q4, this is likely to be weaker than elsewhere in the Eurozone. The faltering real estate sector has already resulted in large numbers of company bankruptcies, higher unemployment and dampened domestic demand in general. This has acute implications for the SME sector and has been largely responsible for the rise in delinquencies among SME ABS transactions in recent quarters."