KBRA UK Releases Research – European Securitisation: Market Slows but Still Active in Q3 2022
LONDON–(BUSINESS WIRE)–#KBRA–KBRA UK (KBRA) releases a research report examining the European securitisation market in third-quarter 2022.
Primary markets have been victims of a rising interest rate environment in response to higher inflation, resulting in a new issuance slowdown as European issuers struggle to keep up with market volatility. In addition, some asset classes, such as commercial mortgage-backed securities (CMBS) and asset-backed securities (ABS) with non-consumer collateral, have been frozen out. Further, residential mortgage issuers in some EU countries have largely gone quiet. Investors have also become more cautious, while issuers have struggled to adjust to the new market pricing.
Third-quarter 2022 could be characterised as a transitional quarter with many issuers holding off on coming to the market in July and August, then capitalising on the focus offered by investors in September. The level of retained transactions increased, with some transactions originally planned to be sold to investors to be subsequently removed. The result has been a quarter period with more issuance retained than newly circulated. In total, Q3 2022 European securitisation reached EUR48.9 billion versus EUR28.5 billion in issued and retained transactions. This compares to newly circulated issuance (excluding refinancing, reset, reissuance, and retentions) at EUR20.4 billion.
Key Takeaways
- Newly circulated transaction volumes declined to EUR20.4 billion in Q3 2022 versus EUR27.1 billion in Q3 2021. Retained issuance also fell in Q3 2022, to EUR28.5 billion from EUR37.4 billion in Q3 2021.
- Excluding BSL CLOs from newly circulated issuance statistics, transaction volumes have been relatively steady. Transactions sold to investors on a quarterly basis remains on pace with historical levels, with EUR53.3 billion in the first nine months (9M) of 2022, versus EUR52.7 billion in 9M 2021.
- The economics of broadly syndicated loan CLOs issuance outside of a new transaction is challenging. Reset and refinancing that occurred in 2021 and prior to 2020 have been absent from the market since Q1 2022. In Q3 2022, BSL CLO new issuance was EUR6.4 billion with no resets, refinancing, or reissuance. In total, new issue transactions are well below the levels in Q3 2021 of EUR10.6 billion newly circulated transactions, with EUR8.4 billion reset and EUR2.9 billion refinancing transactions.
Click here to view the report.
Related Publications
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- European Structured Finance 2022 Sector Outlook: Challenges on the Horizon?
About KBRA
KBRA is a full-service credit rating agency registered in the U.S., the EU, and the UK, and is designated to provide structured finance ratings in Canada. KBRA’s ratings can be used by investors for regulatory capital purposes in multiple jurisdictions.
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Gordon Kerr, Head of European Research
+44 20 8148 1020
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Mauricio Noé, Co-Head of Europe
+44 20 8148 1010
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Miten Amin, Managing Director
+44 20 8148 1002
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