No impact expected on existing ratings

The European banking sector emerged unscathed from the Covid crisis and (so far) from the war in Ukraine, but 2023 will be another year of challenges. Covered bonds will once again shine as the go-to product in stormy times.

Collections on Italian NPL securitisations increased by 9% month-on-month in November. November monthly and year-to-date volumes have been broadly in line over the last three years, at roughly EUR 163m and EUR 1.771bn respectively.

Scope conducted 281 structured finance monitoring reviews in 2022 across 110 transactions. Of these, 13% resulted in downgrades, the same proportion as upgrades. Downgrades were mainly CRE/CMBS (38%) and NPLs (35%).

Growth in European house prices is finally trending down. This comes as no surprise since residential activity in some countries had already indicated a slowdown and lower values. But the picture across the EU, UK, Switzerland and Norway is mixed.

Collections on Italian NPL securitisations fell 19% month-on-month in October and were flat to the volumes seen in the past two years: +5% vs 2021; -3% vs 2020. In the first 10 months of 2022, there were no significant variations either.

No impact expected on existing ratings

Taking the last six months, judicial collections and DPOs were lower than the six months before the pandemic. Note sales have followed a more volatile path but the trend has been upward as servicers rely increasingly on this strategy to generate cash.

Scope Ratings has published the performance overview of notes issued by Marzio Finance, a EUR 10bn securitisation programme backed by ‘cessione del quinto’ and ‘delegazione di pagamento’ (CQS) loans originated by IBL Banca.

Norway’s house prices are falling as the economic backdrop deteriorates and the era of ultra-low interest rates ends. This will expose households to an affordability shock. Banks are entering the challenging environment from a position of strength.