EMEA securitisation remains under pressure.

The performance of many asset classes in the Europe, Middle East and Africa (EMEA) securitisation sector will continue to deteriorate throughout the rest of the year and into 2011, says Moody's in a new Special Report.

The report examines the prospects of recovery for international securitisation in several asset classes and geographies: EMEA Auto ABS, UK Credit Card ABS, UK Non-Conforming RMBS, Spanish ABS and RMBS, Asia Pacific ABS and Global Derivatives. The rating agency expects performance volatility and uncertainty to decline in the coming months, although it cautions that a drop is predicated on achieving some level of economic moderation if not slight improvement, combined with the seasoning of securitised loan portfolios.

Moody's says that although GDP growth is expected to turn positive in many countries in EMEA later this year or in early 2010, employment and home prices will continue to deteriorate well into 2010, which will lead to securitised loan losses remaining at elevated levels throughout 2011 and 2012.

"While there appears to be a glimmer of light at the end of the tunnel, it is still too early to interpret improvement or slowed deterioration in a particular sector as a sign of recovery," says Frederic Drevon, Moody's Head of EMEA Securitisation. "When the securitisation markets do recover, it is uncertain what the level of receptivity will be and therefore what issuance volumes may be."

"Moody's expects the performance of UK Credit Cards ABS to continue to deteriorate into the first half of 2011," says Jean Dornhofer, a Moody's Senior Vice President and co-author of the report. "Losses have accelerated over the past six months. The unemployment rate will again be a key performance factor in this sector."

Moody's also expects that deterioration in the performance of UK Non-Conforming RMBS will continue into 2011. Losses have accelerated over the past six months. The rating agency believes that home prices and the unemployment rate will be key performance factors for this sector.

2009 CPI Financial. All rights reserved.

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