Fitch Ratings said today that deteriorating macro-economic conditions in Spain are continuing weigh on the performance of structured finance assets across different sectors.
The agency notes that the difficult labor market conditions will likely drive further RMBS and ABS deterioration over the near-term.
"Performance across structured finance sectors in Spain continues to be affected by the challenging domestic economic environment, with a sharp rise in unemployment and the ongoing correction in the housing market acting as key catalysts," says Rui J. Pereira, managing director in Fitch's structured finance team in Madrid.
Fitch expects that SME CDO transactions will also remain under pressure due to their significant exposure to the construction and real estate-related segments, and because of tighter credit conditions which have increased refinancing risk.
The deterioration of asset performance has resulted in a growing number of rating actions in recent quarters, with 158 downgrades recorded by the agency in H109. The most affected transactions involve collateral originated at the height of the housing market boom with more aggressive credit attributes.
The agency continues to assign Negative Outlooks to existing transactions, particularly on more vulnerable subordinate classes, reflecting ongoing concerns about Spanish macro-economic conditions and their impact on performance.