KBRA Releases 2020 RMBS Outlook: The Year Non-Prime Takes the Lead?

NEW YORK--()--Kroll Bond Rating Agency (KBRA) presents updates for issuance volume trends and forecasts, spreads, and collateral performance trends. We’ve also included a Themes to Watch in 2020 section to highlight some of the challenges and opportunities faced by RMBS in 2019 with potential impact on the 2020 RMBS market.

  • RMBS 2.0 volumes in 2019 are on target to close at around $58 billion, up 21% year-over-year (YoY) and easily outpaces the 2018 level. The main event in 2019 RMBS issuance was the tremendous growth experienced in the Non-Prime sector, which KBRA forecasts will end the year up 127% on an annualized basis.
  • New Issuers: New issuers have entered the RMBS Jumbo Prime and FirstKey Mortgage sponsored the first publicly rated RMBS HELOC securitization: Towd Point HE Trust 2019-HE1.
  • Performance metrics for all RMBS 2.0 sectors remain relatively positive as losses in prime, CRT, and even non-prime transactions have been nearly zero. Serious delinquencies have risen somewhat significantly for older vintages of non-prime but generally remain benign for more recent vintages.

Ratings Activity

In Q4 2019, KBRA issued pre-sale reports for 22 transactions as of November; 10 prime transactions, including one expanded-prime transaction, three Credit Risk Transfers (CRT), and five non-prime transactions.

KBRA took surveillance rating actions on 4,207 outstanding ratings in 2019, including 501 upgrades, 3,650 affirmations, and 96 withdrawals. The rating actions were mainly as a result of periodic reviews, however, a significant portion (756 rated classes) was due to an intra-annual review of KBRA’s CRT ratings across 32 transactions.

To access the report, please click here.

Related Publications: (available at www.kbra.com)

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About KBRA and KBRA Europe

KBRA is a full-service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider, and is a certified Credit Rating Agency (CRA) by the European Securities and Markets Authority (ESMA). Kroll Bond Rating Agency Europe Limited is registered with ESMA as a CRA.

Contacts

Analytical:

Armine Karajyan, Associate Director
(646) 731-1210
akarajyan@kbra.com

Gary Narvaez, Senior Director
(646) 731-2478
gnarvaez@kbra.com

Sharif Mahdavian, Senior Director
(646) 731-2310
smahdavian@kbra.com

Jack Kahan, Senior Managing Director
(646) 731-2486
jkahan@kbra.com

Business Development:

Michele Patterson, Managing Director
(646) 731-2397
mpatterson@kbra.com

Contacts

Analytical:

Armine Karajyan, Associate Director
(646) 731-1210
akarajyan@kbra.com

Gary Narvaez, Senior Director
(646) 731-2478
gnarvaez@kbra.com

Sharif Mahdavian, Senior Director
(646) 731-2310
smahdavian@kbra.com

Jack Kahan, Senior Managing Director
(646) 731-2486
jkahan@kbra.com

Business Development:

Michele Patterson, Managing Director
(646) 731-2397
mpatterson@kbra.com