Moody's

CLOs, as well as student-loan and single-family rental ABS, face added risks to both issued notes and assets

Liquidity, products and pricing are the main concerns for the secondary mortgage market in 2019.

More collateralized loan obligations are failing weighted-average lift tests due to the dearth of available loans whose near-term maturities could provide some relief to portfolios.

Bank jumbo mortgage underwriting standards weakened in the third quarter by the most in three years and as profitability remains under pressure, loosening should continue at an accelerated pace, a Moody's report said.

In the U.S., the 12-month trailing default rate fell to 3.4% in June from 4% in March, while in Europe it declined to 2.2% from 2.8% over the quarter. Globally, defaults stood at 2.9%, down from 3.4% in the first quarter.

Fannie Mae and Freddie Mac enjoy considerable advantages because of their lower cost of capital and significant government subsidies. But with some conforming loans, the private market is finding a way to compete.

The U.S. CLO manager breaks the ice with its first euro-denominated deal, which priced Friday and will close in May when it is about 75% ramped up.

Just over 20% of the balance are hotel loans, including the second-largest loan in the collateral pool, a $59.9 million portion of a $132.9 million loan used in a cashout refinancing of the Hilton Clearwater.

The money manager is preparing to refinance a $400 million deal originally printed in March 2016 that is currently grandfathered from risk retention rules - without bringing the deal into compliance.

Moody’s expects net losses over the life of NAVSL 2018-2 to be about 0.95%; that's up slightly from 0.9% for Navient's prevous deal, NAVSL 2018-1 due to the longer remaining terms of the collateral.