RPT-Fitch: U.S. Housing Turnaround Drives Drop in Global Securitization Losses

Tue May 27, 2014 9:03am EDT

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May 27 (Reuters) - (The following statement was released by the rating agency)

The turnaround of the U.S. housing market has led to a sizeable decline in pre-crisis global securitization losses, according to Fitch Ratings in a new report.

Total losses on bonds issued between 2000 and 2008 fell to 5% from 5.4% in last year's study. Total losses include both realized and expected future losses. 'Loss performance on U.S. RMBS improved significantly for 2000-2008 deals to 8.7% from 9.6% thanks largely to the stronger than expected housing market recovery,' said Senior Director Gioia Dominedo. Despite the improvement, U.S. RMBS losses still account for over half (54.3%) of global losses across all 2000-2013 vintages. Losses on prime deals (3.4%) are considerably lower than on Alt-A (16.1%) and subprime deals (10.7%).

'Improved loss performance for both global structured credit and U.S. CMBS deals also contributed to the lower loss rates overall, albeit to a lesser extent,' said Dominedo. That said, structured credit still accounts for 28.7% of global securitization losses. Fitch projects total losses of 11.1% on global structured credit, which drop to 3.5% when excluding SF CDOs.

Fitch expects total losses of 4.1% of the bond balance issued between 2000 and 2013. A closer look reveals an encouraging sign for post-crisis transactions. Issued after 2008, these deals thus far account for only 0.1% of loss estimates.

'Global Structured Finance Losses: 2000-2013 Issuance' is available at 'www.fitchratings.com' or by clicking on the below link.

Link to Fitch Ratings' Report: Global Structured Finance Losses: 2000–2013 Issuance