The introduction by Poland’s financial supervisory authority (KNF) of a long-term finance ratio for residential mortgages could provide a boost to Poland’s hibernating covered bond market. Green covered bonds could become the instrument of choice.

This year will not set any records for investor-placed covered bonds. After moderate-to-strong activity for most of the year, issuance in June was the slowest in over 10 years. But we still believe our projected volume of EUR 170bn for 2024 is feasible.

The new structured finance methodology is specific to residential mortgage-backed securities, mainly in Europe.

There is less than six months to go until the property value in the updated Capital Requirements Regulation takes effect. This could have a notable impact on covered bonds as market values are directly linked to the amount of bonds that can be issued.

Italian NPL collections of EUR 208m in May 2024 were 12% up month-on-month but 15% below the May average of the last two years owing to a 29% decline in DPOs.

The persistent negative rating drift in place between the fourth quarter of 2021 and third quarter of 2023 continues to recede. The upward shift is mainly due to reduced rating pressure on CRE/CMBS and secured NPL transactions.

Losses to senior noteholders of the Elizabeth Finance 2018 CMBS resulting from the sale price of the properties securing the Maroon loan was an idiosyncratic outcome. It may not be a unique outlier but will not trigger wider market turbulence.

Lower than expected indemnity proceeds and long indemnity processes have led to recovery shortfalls in most Italian NPL transactions so far.

A sustained period of higher interest rates will present a challenge for many borrowers worldwide, as economies adapt to a new era of comparatively tight monetary policy amid a recovery in growth and enduring inflation.

Italian NPL collections of EUR 185m in April 2024 were 13% down month-on-month and below the average of April collections in the last two years. The most seasoned transactions show a significant decline in DPOs and notes sales.