Payment holidays squeeze securitised products

Author: Jimmie Franklin | Published: 20 May 2020

Securitised products are facing growing challenges following Covid 19, with the market adapting to a harsher outlook than before.

Bankers say that the biggest challenge going forward is seeing how underlying assets will perform and what will be the impact on transactions.

"The question remains of whether we will see more arrears and defaults," said Bart Verwaest, head of structured finance at Belgian financial service, Belfius Bank. "That could impact the market. It would also be good to see how the ratings agencies will react in the long run and their assessment on performance and estimates."

Authorities in Italy, Germany and the UK have granted unprecedented mortgage holidays in in light of the lockdown measures preventing people from working – which have put a strain on the value of these products’ underlying assets.

Linklaters partner Andrew Vickery said that payment holidays have squeezed revenues but that this varies depending on the...