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Morningstar Moves in on RMBS and ABS Ratings

The National Association of Insurance Commissioners (NAIC) will extend Morningstar Credit Ratings designation on the NAIC credit rating provider list to all mortgage-backed securities (RMBS) and asset-backed securities.

Morningstar had previously only been designated by the NAIC to provide credit ratings on commercial mortgage-backed securities (CMBS). The ratings agency ratings have featured frequently in recent CMBS and single-family rental securitization deals.

The inclusion of Morningstar ratings means insurance companies will have more choices among credit rating providers for determining risk-based capital under NAIC guidelines.

“This is significant for insurance companies investing in MBS and ABS, as those firms using a current, monitored rating from a designated credit rating provider are exempt from making a filing for the respective securities with the NAIC’s Security and Valuation Office, which will save them time,”  said Vickie Tillman, president of Morningstar Credit Ratings in a press release.

On June 13 the ratings agency published a new methodology for U.S. RMBS ratings that coveres prime jumbo, alternative-A, and subprime RMBS. The methodology covers also covers agency risk-sharing securities and securities backed by non-qualified mortgages, nonperforming loans, and reperforming loans.

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