Prime RMBS performance in Spain looked relatively stable month-to-month in August, but the full impact of the country's record high unemployment has not yet taken full effect, according to a Moody’s Investors Service report.

In Spain, where unemployment reached 20.7% in September, unemployment benefits and family support networks have helped to support borrowers and blunt the high jobless rate’s effect on prime RMBS performance.

However, the potential unemployment of multiple family members could eventually put holes in that safety net, Moody’s warned. The rating agency said unemployment is expected to decline in the country, but very gradually to the point where it will be a projected 19.5% by the fourth quarter of next year.

Month-to-month, cumulative prime Spanish RMBS defaults in August — ahead of the September peak in unemployment — were up just slightly to 1.65% from 1.64%, according to Moody’s. In addition, the 90-plus day delinquency trend inched down to 1.08% from 1.11%.

Despite what appears to be a moderation in performance, reserve funds are being eroded, according to Moody’s. The rating agency found 60 transactions are below their target level. In total, there are 213 RMBS transactions outstanding in Spain, Moody’s data showed.

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