Fitch Releases 2004 U.S. Structured Finance Rating Transition Study.NEW YORK New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of -- Fitch Ratings Fitch Ratings An international rating agency for financial institutions, insurance companies, and corporate, sovereign, and municipal debt. Fitch Ratings has headquarters in New York and London and is wholly owned by FIMALAC of Paris. has released a new study examining the performance of its U.S. structured finance ratings in 2004 and over the period 1991 - 2004. The frequency of Fitch's U.S. structured finance upgrades and downgrades both declined in 2004. However, the decrease in the number of downgrades was more pronounced than the decrease in upgrades, resulting in an improved ratio of upgrades to downgrades for the year of 2.36 to 1 compared with 1.95 to 1 in 2003. The residential mortgage-backed securities sector continued to contribute the bulk of the year's upgrades although its dominance diminished. In fact, RMBS RMBS Residential Mortgage-Backed Securities RMBS Rambus, Inc. (NASDAQ stock symbol) RMBS Russian Mortgage-Backed Securities upgrades, while continuing to tower over downgrades by a ratio of nearly 12 to 1, declined year over year due to a notable slowdown in refinancing activity in the second half of the year. In contrast, upgrades were up significantly across all the other major structured finance sectors, including asset-backed securities (upgrades doubled relative to 2003), commercial mortgage-backed securities (up 26%) and collateralized debt obligations Collateralized Debt Obligation (CDO) A general inclusive term which covers Collateralized Bond Obligations, Collateralized Loan Obligations, and Collateralized Mortgage Obligations, (up 70%). Both consumer and corporate related transactions benefited from the year's strong economic climate. In addition, Fitch's structured finance downgrades fell across the board in 2004. The number of RMBS downgrades declined 40%, ABS downgrades fell 21%, CMBS CMBS See: Commercial Mortgage Backed Securities downgrades 25%, and CDO (Collaborative Data Objects) A programming interface from Microsoft for accessing MAPI-based e-mail, calendaring and scheduling servers. Originally called "OLE Messaging" and "Active Messaging," CDO wraps the Enhanced MAPI library into a COM object that provides the downgrades 45%. 'A robust economic environment, characterized by strong consumer spending Consumer demand or consumption is also known as personal consumption expenditure. It is the largest part of aggregate demand or effective demand at the macroeconomic level. , lower unemployment levels, and a decline in personal bankruptcy Personal bankruptcy is a procedure which, in certain jurisdictions, allows an individual to declare bankruptcy. In other jurisdictions, bankruptcies are reserved for corporations. filings, helped to contribute to positive rating performance in the consumer and commercial non-real estate ABS sectors,' said Stephanie Mah, Senior Director, Credit Market Research, Fitch Ratings. 'Further, the rebound in corporate credit quality in 2004 boosted CDO rating performance,' said Mariarosa Verde, Managing Director, Credit Market Research, Fitch Ratings. Rating performance improved across all the major structured finance rating categories in 2004. Overall, 10% of Fitch's U.S. structured finance ratings were upgraded in 2004 while just 4% suffered downgrades. Fitch's study analyzes the migration of U.S. structured finance securities from 1991-2004, with the latest version focusing on 2004 transition performance for each of the major sectors including ABS, RMBS, CMBS and CDOs. 'Fitch Ratings 1991-2004 Structured Finance Transition Study' is available under the Credit Market Research section of the Fitch Ratings web site at www.fitchratings.com. |
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