KBRA Releases Research – 2026 European Structured Finance Sector Outlook: Resilient Foundations Supporting Continued Growth

LONDON--(BUSINESS WIRE)--KBRA releases its 2026 European Structured Finance Sector Outlook. The report highlights how the European structured finance market is entering 2026 from a position of relative strength, underpinned by sound credit fundamentals across most sectors. Although geopolitical tensions and trade uncertainties continue to pose risks, the overall outlook remains one of cautious optimism, supported by broadly stable macroeconomic conditions.

New issuance volumes are expected to rise modestly in 2026, reflecting healthy investor demand and stable funding conditions. Credit performance across sectors is expected to remain solid, underpinned by relatively low unemployment and steady real income growth.

Key Takeaways

• Issuance Volumes: We forecast issuance volumes to reach approximately EUR287 billion in 2026, representing a modest 4.4% increase from the record 2025 level. European securitisation issuance increased 9% year-over-year (YoY) through the first 10 months and is expected to close 2025 at around EUR275 billion, matching the post-global financial crisis (GFC) high reached in 2021. Asset-backed securities (ABS) issuance is expected to maintain momentum and UK residential mortgage-backed securities (RMBS) are expected to rebound, while European Union (EU) RMBS volumes soften slightly. Collateralised loan obligation (CLO) and commercial mortgage-backed securities (CMBS) issuance are expected to remain flat or lower following record activity in 2025. Meanwhile, asset-backed securities (ABS) issuance is expected to maintain momentum, with growth in renewables-linked and data centre ABS, underscoring growing structural diversification across European markets. Renewables-linked and data centre securitisations are expected to continue expanding, underscoring growing structural diversification across European markets.
• Macro Conditions: Inflation has largely settled within a more normal range, policy rates are expected to remain steady in the euro area and ease modestly in the UK, and growth remains modest but durable. Healthy labour markets and firm household income continue to support borrower performance.
• Credit Performance: Credit performance across sectors is generally expected to remain resilient, supported by low unemployment and moderate real income gains. Consumer arrears may edge higher in some segments but should remain within historical norms. CMBS performance remains mixed, with prime assets demonstrating stability while weaker office exposures face ongoing refinancing pressures. Meanwhile, structured credit collateral performance is expected to remain broadly stable, supported by steady portfolio quality and low default rates.
• Surveillance Activity: As of 31 October, KBRA conducted surveillance reviews on 377 securities in 81 transactions, resulting in 307 affirmations (81%), 44 upgrades (12%), and 26 downgrades (7%). KBRA expects European structured finance ratings to exhibit stability in 2026.

Click here to view the report.

About KBRA

KBRA, one of the major credit rating agencies, is registered in the U.S., EU, and the UK. KBRA is recognized as a Qualified Rating Agency in Taiwan, and is also a Designated Rating Organization for structured finance ratings in Canada. As a full-service credit rating agency, investors can use KBRA ratings for regulatory capital purposes in multiple jurisdictions.

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