Wednesday, June 7th 2023 - 3:30 PM (CEST)

Tuesday, June 20th 2023 - 3:00 PM (CEST)

March Italian NPL collections increased by 33% on the month but were 23% and 28% lower than March 2021 and 2022, respectively. Meanwhile, first quarter 2023 volumes were 16% below the average of the same period of the previous two years.

The updated methodology, now final following a call-for-coment period, will apply to all covered bonds ratings.

We expect the performance of Italian NPL securitisations to remain subdued in 2023, although stable relative to last year. A series of factors is slowing the Italian economy and weakening affordability, which could in turn compromise collections.

Recent events regarding Credit Suisse and US regional banks have a direct read-across to covered bonds in that it was not credit quality but liquidity that led to the banks’ downfall, plus the crystallisation of market-value losses on high-quality assets.

The uncertain economic environment continues to push European house prices lower. But challenges are also crystallising in net residential mortgage lending, which nosedived to almost zero in the half year to February 2023, only slowly reverting in March.

Italy’s full transposition of the EU Covered Bond Directive paves the way for Italian issuers to return to the covered bond market. The updated legal framework is credit neutral to our governance support, allowing issuers to achieve the highest ratings.

European residential real estate firms face price, interest-cover pressure; refinancing risk intensifies for CMBS; covered bonds to shine as go-to product in troubled times; higher rates challenge open-ended real estate funds.

The deteriorating macroeconomic environment led to a worsening trend in Scope’s 12-month trailing ratings drift in the first quarter of 2023, continuing the downward path that began in Q4 2021.