After a strong January, EUR benchmark covered bond issuance slowed in February and March. Some of the reluctance to issue may have been driven by Germany’s specialised commercial mortgage lenders, given rising tensions in commercial real estate.

Europe’s real estate companies grapple with negative credit outlook; German banks look resilient despite CRE risks; bond market access is a differentiator for property companies; systemic risks are still high in European housing

February 2024 Italian NPL collections of EUR 114m were 15% up month-on-month but 18% below the February average of the three previous years.

January 2024 Italian NPL collections of EUR 99m were 56% down month-on-month and 12% below the January average of the three previous years, continuing the declining trend observed throughout 2023.

No impact on existing ratings

Scope’s 12-month trailing negative rating drift in structured finance continued to subside in Q4 2023, moving further off the trough reached in Q2 2023. The downtrend started in Q4 2021 owing to the deteriorating economic environment.

December Italian NPL collections rose by 87% month-on-month to EUR226m. But they were still 12% below the average of December 2021 and 2022. Collections for the whole of 2023 fell by 21% against the previous two-year average.

Scope Ratings has published the performance overview of notes issued by Marzio Finance, a EUR 10bn securitisation programme backed by ‘cessione del quinto’ and ‘delegazione di pagamento’ (CQS) loans originated by IBL Banca.

Expectations for a soft landing and a normalisation of economic and monetary conditions are likely to cause negative ratings drift to abate even while servicer performance continues to undershoot expectations. Our outlook remains skewed to the downside.

No impact expected on existing ratings