Asset-Backed Securities Faring Best in Structured Finance

by: Research Recap

US and EMEA non-mortgage Asset-backed Securities continue to demonstrate the highest level of rating stability among structured finance instruments and are expected to remain resistant to downgrades, particularly at the ‘AAA’ level, according to Fitch Ratings.

In its , Fitch said during Q209, the performance of US credit card ABS continued to deteriorate with increasing charge-offs and compressing excess spread compared to the prior quarter. However, the ratings on many trusts remained stable as issuers have taken various actions to increase credit enhancement (CE) and utilised the discount option.

Fitch continues to expect current ratings of senior tranches to remain stable given available credit enhancement and structural protection afforded investors.

“The outlook for subordinate tranches becomes increasingly negative, particularly given recent delinquency and personal bankruptcy filing trends.”

Fitch’s Global Structured Finance Quarterly Rating Review covers all Fitch-rated, public, long-term international structured finance.