Europe’s real estate firms find funding respite but refinancing challenge looms; covered bonds provide stability in turbulent times; non-prime office segment faces rising vacancy rates; what can Frederick the Great tell us about today’s capital markets?

Our distressed house price decline (HPD) benchmark assumptions for structured finance transactions have been updated to reflect real estate market vulnerabilities in 18 European countries under a severe economic shock.

Italian NPL collections fell 62% in January 2025 month-on-month, tracking the same trend observed between December 2023 and January 2024 (-60%).

Italian NPL collections surged by 81% month-on-month in December 2024 to EUR 339m, reaffirming the trend that this month typically sees the highest collections of the year. But even then, volumes were 23% lower than the 2022/2023 December average.

The introduction of Dutch-specific assumptions strengthens transparency and standardisation in the RMBS rating methodology. Scope is calling for comments until the 7 March 2025.

Scope assigned new ratings to 78 instruments on 49 structured finance transactions in 2024, raising rated new-issue volume by 7.2%. On monitoring activity, heavy downgrades in Q1 pushed the 12-month ratings drift below neutral despite a strong Q4.

We are constructive on European covered bond ratings. European banks entered 2025 in solid shape, while a stable European economy will support rating levels. But investors will need to remain vigilant for risks that could catch the market off guard.

Commercial real estate will stabilise in 2025. Refinancing risk will remain elevated for the office sector but improving financing conditions and good fundamentals will improve access to capital for other sectors.

Italian NPL collections increased by 8% month-on-month to EUR 187m in November, continuing the trend observed over the past two years. However, volumes were 21% lower than the average for the same month in the 2022/2023 period.

Scope Ratings publishes its final rating methodology for CRE securities and CMBS following a call for comments. The proposed update clarifies and refines the analytical approach. The application of the methodology affects several outstanding ratings.