Fitch

Ratings are holding up but global economic prospects dim

The voice and data network operator has been growing rapidly in underserved areas of the U.S.

Fitch says it will be weighing failures of management standards and practices at banks more heavily when considering possible downgrades. ESG advocates are cheering the development.

The second securitization from the joint venture AGCO Finance is preparing to issue $1 billion in notes backed by payments on retail installment loans and lease contracts on new and used agricultural equipment.

The deal has a more diversified pool than previous ones.

The pool of pass-through commercial mortgage-backed securities is mostly made up of single-family and multifamily residences.

The performance of U.S. credit card securitizations is continuing to improve, according to Fitch Ratings, but the asset class's ongoing health will depend significantly on what emerges from political squabbles in Washington, D.C.

Delinquencies will rise due to the severe effects of the pandemic on the commercial property sector, Fitch said.

Borrowers will likely have to put more assets on the line to get forbearance extensions.

More than 2,500 Fitch-rated structured finance transactions face significant challenges transitioning from Libor to an alternative floating-rate benchmark, but the ratings agency doesn’t foresee that resulting in potential ratings downgrades until 2022.

For banks with assets between $10 billion and $100 billion, the average exposure is 165% of capital.

The firm also predicts that the coronavirus pandemic will delay the GSEs' release from government control.

The ratings firm also took negative action with respect to Ally, Synchrony, Discover, Sallie Mae and Navient, citing the impact that the coronavirus crisis is having on their revenues and profits.

According to a new academic research report, CLO managers have taken advantage of S&P's ratings methodology for a ratings boost on lower-rated tranches - enabling them to offer more return for what seemed like less risk.

Fitch assumes a significant spike in defaults over the next few months, as well as declining new issuance volume during the second and third quarters of 2020, fewer maturing loans and fewer resolutions by special servicers.

Historically low interest rates, low unemployment and positive yet slowing economic growth will support stable U.S. structured finance asset performance in 2020.

The delinquency rate for commercial mortgage-backed securities ended 2019 at its lowest point in nearly 11 years, aided by increased issuance and the resolution of legacy transactions, Fitch Ratings said.

Charge-offs in prime bank cards fell to 3.01%, a third consecutive month in the sector. Meanwhile, retail-card ABS had its best charge-off performance since October 2018.

Trustees are concerned about obtaining proper consents from legacy residential mortgage-backed securities investors in a timely fashion in order to make the switch from Libor to another index, Fitch Ratings said.

Life insurance companies increased their mortgage investments to levels higher than historical norms, creating more potential danger for their portfolios in the event of a real estate downturn, a Fitch Ratings report said.