NPLs
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Leading the way
A look at the European DataWarehouse's role in the NPL securitisation space
The all too real impacts of the pandemic-driven crisis are already finding their way in to European DataWarehouse's (ED) loan-level data. While it does not relish that particular leading role, the repository intends to remain at the forefront of the development of the NPL securitisation market throughout the crisis and far beyond.
"We're already starting to see very early impacts .......
Provider Profile 19 May 2020
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Questionable idea?
Central bad bank proposal raises concerns
The ECB is exploring the idea of a bad bank to relieve European bank balance sheets following expected asset-quality deterioration, due to the coronavirus fallout. Nevertheless, such a proposal would have to explain how purchase prices can be aligned with net book values, with some suggesting the move may be premature at this point.
Indeed, any Europe-wide bad bank proposal .......
News Analysis 14 May 2020
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Positive outlook
Survey indicates distressed debt pick-up
A new survey of private markets suggests that a pick-up in distressed debt activity is likely over the medium term due to the Coronavirus crisis. However, live deals are being renegotiated or postponed, with servicers adopting more consensual resolution strategies.
Private market participants are already finetuning their outlook and strategies for the next 18 to 24 months, even .......
News 13 May 2020
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NPA opportunities
Global investors target Indian distressed debt
The coronavirus fallout is set to severely impact credit delivery and asset quality in India, with over US$30.5bn of loans expected to become stressed over the next 12 months. Securitisation could help the banking sector address its non-performing asset (NPA) burden, especially if the Indian government further liberalises the country’s External Commercial Borrowing (ECB) regime.
Nathan Menon, senior .......
News Analysis 7 May 2020
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On hold
Italian NPL ABS to pick up next year
Italian non-performing loan securitisations are anticipated to drop by 50%-70% this year, compared to 2019, as the Covid-19 fallout puts bank deleveraging plans on hold (SCI passim). However, NPL ABS issuance is expected to pick up next year.
According to Scope Ratings: “We do not expect Italian NPL securitisations to reach the levels of 2018-2019. Activity may increase .......
News 4 May 2020
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Performance pressures
Irish mortgage loan restructurings anticipated
Deteriorating collateral values and higher defaults are expected to impair the performance of Irish re-performing RMBS, even if cash reserves are adequate to cover liquidity shortfalls related to Covid-19 payment holidays. Indeed, Scope Ratings expects an increase in mortgage defaults to drive another wave of loan restructurings, which will – in turn - increase recovery timings.
The top .......
News 30 April 2020
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Inventory ABS prepped
Sector developments and company hires
Inventory ABS prepped
Market Moves 24 April 2020
Fintech platform Supply@ME Capital (SYME) has entered into an agreement with StormHarbour Securities for the issue, distribution and placing of a series of ABS that are guaranteed against inventories purchased directly by the platform's SPVs (SCI 15 April). Details of the securitisation programme are being finalised, but it is anticipated to cover - within 12 months .......
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NPL ABS eyed
Greek banks target HAPS, despite virus crisis
Greek banks are targeting over €30bn of non-performing loan securitisations in 2020 via the Hercules Asset Protection Scheme (HAPS). However, recent measures to curtail the spread of Covid-19 could render this task more difficult (SCI 9 April).
Among the banks readying NPL ABS deals is Alpha Bank, which intends to frontload the sale of its NPL exposures with a .......
News Analysis 24 April 2020
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Underperformance underlined
Italian NPL ABS ratings hit
Moody’s has downgraded and placed on review for further downgrade the ratings of two notes and placed on review for downgrade the ratings of 12 notes across 11 Italian non-performing loan securitisations. The downgrades reflect underperformance against initial assumptions and the rating reviews reflect the slower and potentially lower anticipated cashflows in the transactions, given the reduced functionality of the .......
News 24 April 2020
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HAPS halt?
Greek NPE ABS plans disrupted
The non-performing exposure reduction plans of the four systemic Greek banks are expected to be delayed by deteriorating market conditions. The banks had been ramping up preparations to execute around €32.5bn of securitisation volume in the coming quarters via the Hercules Asset Protection Scheme (HAPS).
The NPE securitisation plans announced by Alpha Bank, Eurobank, National Bank of Greece .......
News 9 April 2020
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CECL delayed
EU banks await IFRS 9 relief
The US Fed, the FDIC and the OCC last week approved an extension of the new credit loss accounting standard CECL until 2022. No equivalent action has been taken for IFRS 9 on the EU side, however.
According to the US regulators’ joint statement, banking organisations that are required under US accounting standards to adopt CECL this year .......
News 31 March 2020
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Liquidity risk
Pandemic pressure on NPL performance
Economic disruption caused by Covid-19 is expected to negatively impact the timing and amount of collections for non-performing loan securitisations from the euro-area periphery. NPL transactions are exposed not only to direct economic shocks, but also to the shutdown of non-essential activities, particularly the legal and real estate industries.
Scope Ratings reports that the progress of NPL work-out strategies in .......
News 27 March 2020
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NPL supervisory flexibility introduced
Sector developments and company hires
Canadian purchase programme
Market Moves 20 March 2020
The Canadian government has launched a revised Insured Mortgage Purchase Program (IMPP), under which it will purchase up to US$50bn of insured mortgage pools through the Canada Mortgage and Housing Corporation. The move aims to provide stable funding to banks and mortgage lenders in order to ensure continued lending to Canadian consumers and businesses. The first purchase .......
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SCI Start the Week - 16 March
A review of securitisation activity over the past seven days
SCI NPL Securitisation Awards 2020
News 16 March 2020
As a result of COVID-19, the SCI NPL Securitisation seminar has unfortunately had to be postponed and along with it the inaugural SCI NPL Securitisation Awards ceremony. Nominations remain open and a revised deadline for them will be announced in due course. Further information and details of how to pitch can be found here.
This week's stories
AMC .......
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AMC uncertainty
Trade deal clouded by uncertainties for NPLs
The US-China trade deal now finally allows foreign investors to acquire coveted local AMC licences that will in turn allow them to buy non-performing loans directly from banks. However, foreign investors remain in the dark about whether foreign-owned AMCs will be able to engage in the same activities as domestic ones.
According to King & Wood Mallesons (KWM), compared .......
News 13 March 2020
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Mortgage moratoriums
Impact of payment suspensions to be limited
The Italian government and a trio each (at the time of writing) of lenders in Ireland and the UK are set to temporarily suspend mortgage payments for certain borrowers amid the disruption caused by COVID-19. The impact of these moratoriums is expected to be limited for RMBS bondholders, however, unless more sweeping or long-lasting programmes are introduced.
In .......
News 12 March 2020
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NPL reductions eyed
Greek liquidation law set to facilitate securitisation
Non-performing loan securitisations are expected to be the primary tool for NPL reductions in Greece over the next 18 months, given the option of derecognising assets without incurring punitive capital charges, the HAPS guarantee and the tough NPL reduction targets that banks have to meet by the end of 2021. One factor that will help in this respect is .......
News Analysis 6 March 2020
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IRPH index ruling 'credit negative'
Sector developments and company hires
CMBS property sales
Market Moves 3 March 2020
KBRA has been notified of the sale of 29 properties in the Eos (ELoC No. 35) CMBS. All of the properties are located in the Netherlands and nearly all (28) are industrial assets. As a result of the sale, an amount equal to €74.3m will be applied in mandatory prepayment of the senior loan, representing 17.9% of .......
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Performance issues
Italian NPL ABS business plans scrutinised
A recent analysis of 19 Italian non-performing loan securitisations reveals that 15 of these transactions are overperforming in terms of closed borrowers’ profitability. The study suggests that onboarding processes and collection times impact performance.
The analysis, undertaken by Scope, also states that seven out of the 19 transactions underperformed. On average closed borrowers represent less than 5% of .......
News 3 March 2020
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NPL recognition delayed
Chinese SMEs supported amid Coronavirus outbreak
Chinese regulators are allowing the country’s banks to delay the recognition of non-performing loans for SMEs faltering from the Coronavirus outbreak. The measures include tailored aid to SMEs but are further complemented by monetary policy instruments.
Qualified SMEs nationwide with principal or interest due between 25 January and 30 June can apply for a delay to the end .......
News 2 March 2020
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Project Cairo prepped
Eurobank applies for HAPS guarantee
Eurobank has applied to the Greek government for a senior tranche guarantee under the Hercules Asset Protection Scheme (HAPS). The guarantee is sized at €1.65bn and concerns two non-performing loan securitisations dubbed Cairo One and Two. Further applications are expected following a series of announcements of pending HAPS NPL ABS deals by Greek systemic banks (SCI 4 February).
News 26 February 2020