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.

Scope Ratings calls for comments on its Government Related Entities Rating Methodology by 29 July 2024. The proposed update refines Scope’s analytical approach. No rating changes are expected as a result of this update.

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.

Heightened policy uncertainty in France and the threat of political instability after parliamentary elections have exposed the country’s banks to significant market volatility and challenged their ability to improve profitability relative to peers.

Scope has published the final version of its supranational methodology together with a feedback report addressing market participants’ comments. The methodology update, which follows a call for comments released on 10 May 2024, has no rating impact.

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.

The methodology is now final following a call-for-comments period and will apply to all issuer and debt ratings of corporates in the sector. The application of the updated methodology will not trigger any rating changes.

Strong momentum behind the Flemish nationalists and separatists in Belgium’s federal election aggravates political fragmentation and polarization. It complicates forming a new government and the consolidation of public finances, a key credit challenge.