Fitch Sees Significant Negative Ratings Effects on MBS in 2009
Fitch Ratings expects to see significant negative rating effects in 2009 across broad sectors of the US structured finance due to continued turbulence in the financial markets and a dramatic slowdown in the real economy. However, the high investment-grade ratings for seven of the 14 asset classes generally expected to have ratings stability.
Fitch anticipates that the ‘AAA’ through ‘A’ ratings on prime credit cards, prime autos, FFELP student loans, large loan, and multiborrower commercial mortgage transactions and investment-grade corporate collateralized debt obligations (CDOs), among others, will remain well insulated from the tumultuous conditions and have limited risk of downgrade actions.
In contrast, the ‘AAA’ through ‘A’ rated tranches for the remaining seven sectors, including all areas of residential mortgages, are more susceptible to downgrades due to continued substantial deterioration in collateral performance.
The ‘BBB’ and below rating categories in all of the sectors are at the greatest risk of downgrades given their positions in the capital structure and sensitivity to deteriorating macroeconomic conditions, Fitch said.
For details by sector see: 2009 U.S. Structured Finance Outlook.
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