The Spanish SME loan securitization sector continues to deteriorate at an accelerating pace as a result of the weak macro outlook and the intense pressure on Spains housing and construction businesses, according to Merrill Lynch research.
Analysts had previously noted how early 4Q08 data showed marked acceleration in what was to that point an orderly deterioration in underlying credit trends.
The final figures for the full year 2008 confirm this sharp deterioration, with both total and severe delinquencies soaring across all vintages. These trends highlight that early delinquencies do not seem to be cured and move into higher delinquency buckets, while new delinquent loans keep pouring in the early delinquencies buckets.
"As discussed previously, challenges in the Spanish economy remain numerous, and we fail to see much room for a real improvement in credit performance for the SME sector in the coming months," analysts said.