Structured Finance Trends: 2020 Review and 2021 Outlook
29 April 2021 – GCR Ratings (“GCR”) has published its annual bulletin on the performance of the Structured Finance Sector for 2020 and Outlook for 2021 taking account of Residential Mortgage-Backed Securities, as well as, Auto loan, Equipment lease and Microloan Asset Back Securities.
Issuance volumes have been subdued in 2020 compared to 2019.
The pandemic caused a general drop in asset performance across all asset classes in terms of an increase in arrears, drop in excess spread and collection rates. The decrease in performance was exacerbated in 2020 Q2 and 2020 Q3.
Some asset classes have shown signs of recovery in 2020 Q4.
The vast majority of rating actions in 2020 have been affirmations of ratings.
In terms of outlook for 2021 GCR expects most asset classes to show signs of recovery but at a different pace.
GCR will periodically provide insights on various asset classes, encompassing performance trends as well as changes in the economic and operating environment.
Criteria for Rating Residential Mortgage Backed Securities – Nov ‘18
Criteria for Rating Consumer Asset Backed Securities – Sept ‘18
GCR Rating Scales Symbols and Definitions – May ‘19
South African Reserve Bank Quarterly Economic Review – Dec 2020
South African Reserve Bank Composite Business Cycle Indicators for South Africa – Mar 2021
2021 South Africa Budget Speech – Minister of Finance: Tito Titus Mboweni – Feb 2021
TransUnion Vehicle Pricing Index – Q4 2020
Experian Q3 2020 Consumer Default Index – Nov 2020
CREDIT RATINGS ISSUED AND RESEARCH PUBLICATIONS PUBLISHED BY GCR, ARE GCR’S OPINIONS, AS AT THE DATE OF ISSUE OR PUBLICATION THEREOF, OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES. GCR DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL AND/OR FINANCIAL OBLIGATIONS AS THEY BECOME DUE. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: FRAUD, MARKET LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS AND GCR’S OPINIONS INCLUDED IN GCR’S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. CREDIT RATINGS AND GCR’S PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND CREDIT RATINGS AND GCR’S PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL OR HOLD PARTICULAR SECURITIES. NEITHER GCR’S CREDIT RATINGS, NOR ITS PUBLICATIONS, COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. GCR ISSUES ITS CREDIT RATINGS AND PUBLISHES GCR’S PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING OR SALE.
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