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.

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.

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.

This year has seen a rise in large bank M&A, reigniting speculation that a wave of consolidation may be imminent. The case for large cross-border mergers remains weak but there is potential for domestic activity in Italy, Spain, Germany and the UK.

The new structured finance methodology is specific to residential mortgage-backed securities, mainly in Europe. Scope is calling for comments until the 1st of July 2024.

Spanish banks saw record net interest income in Q1 while the cost of deposits likely reached its peak. BBVA’s bid for Sabadell could herald a period of consolidation in a dynamic economy offering growth opportunities that could benefit pricing power.

Q1 Italian NPL volumes were the lowest since 2021, 19% below the 2022/2023 average, while March 2024 collections were 36% below the average of the past two years even though there were more transactions (44) than in the two previous years (41 and 43).