Moody's: EMEA ABS SME loan and lease 60-90 days delinquencies improve
The 60-90 days delinquencies rate of asset-backed securities (ABS) backed by loans and leases to small and medium-sized enterprises (ABS SME) in Europe, the Middle East and Africa (EMEA) improved in the three months ended December 2016, according to the latest index report published by Moody's Investors Service.
The 60-90 days delinquency rate decreased to 0.5 per cent in December 2016 from 0.7 per cent in September 2016. Meanwhile the 90-360 day delinquency did not remarkably change in December 2016 compared to September 2016, stabilising at 1.3 per cent.
The performance of Spanish transactions improved in December 2016; the 90-360 day delinquency rate decreased from the 1.4 per cent recorded in September 2016 to 1.2 per cent in December 2016. Belgian transactions showed stable performance with the 90-360 days delinquency rate for the Belgian index remaining at around 0.3 per cent in December 2016.
The prepayment rate across the EMEA indices increased to 7.3 per cent in December 2016 from 6.9 per cent in September 2016.
As of December 2016, the 90 outstanding EMEA ABS SME loan and lease transactions rated by Moody's had an outstanding pool balance of EUR 73.8 billion, compared with EUR 71.4 billion a year earlier, representing a 3.4 per cent increase. The most relevant countries by outstanding pool balance are Italy (EUR 23.9 billion), Belgium (EUR 18.4 billion) and Spain (EUR 17.5 billion).
The strengthening of the euro relative to the pound will have a slight negative effect on the SME ABS we rate as a result of the major SME ABS regions' slight trade imbalance with the UK. (see Euro appreciation Against the Pound Is Slightly Credit Negative for European SMEs).