KBRA Releases Research – KBRA’s European Securitisation Survey: Diverging Views

LONDON--(BUSINESS WIRE)--KBRA UK (KBRA) releases a report involving the results of its June 2023 European securitisation investor survey.

KBRA surveyed European structured finance investors to gauge their recent views and expectations regarding the market. This report aggregates and analyses the responses for KBRA’s third European investor survey, revealing a divergence of views versus expectations from December and June 2022. The sector faces a challenging time, as rates are likely to remain high in the near term and borrowers are being squeezed with high inflation and refinancing costs. Overall, sentiment has deteriorated slightly from December, where a more positive view for 2023 was expressed. However, sentiment has not deteriorated to the levels of June 2022, and views remain divergent, with a marginal leaning towards a negative outlook.

Key Takeaways

• Investors are largely divided on the direction of the market, with a slight widening bias in European securitisation markets over the next six months. This is a change in direction from the expectations for tightening in KBRA’s December 2022 survey. The tightening bias in the next six months is expected to be focused in the ABS market, while investors in CMBS and nonperforming loans (NPL) lean towards future spread widening as the economic environment continues impacting these sectors more heavily. Bank investors and insurance companies are the main believers in future widening, with hedge funds and independent investment managers leaning towards further tightening.
• Issuance is expected to pick up in the next six months after a quiet 1H. Sectors with the strongest bias towards a growing pipeline are collateralized loan obligations (CLO), asset-backed securities (ABS), residential mortgage-backed securities (RMBS), and Other.
• The UK overwhelmingly remains the region of greatest concern from a collateral performance perspective for investors. However, concern is growing that collateral performance deterioration will occur across Europe, rather than in any one region.

Click here to view the report.

Related Publications

• KBRA’s European Securitisation Survey: Glimpse of a Positive Turn?
• KBRA’s European Securitisation Survey Reveals Market Concerns
• European Securitisation: Sluggish Issuance Continues in 2023

About KBRA
KBRA is a full-service credit rating agency registered in the U.S., the EU and the UK, and is designated to provide structured finance ratings in Canada. KBRA’s ratings can be used by investors for regulatory capital purposes in multiple jurisdictions.