Kroll Bond Rating Agency (KBRA) releases research discussing the impact of federal stimulus measures on securitizations backed by consumer receivables.
All eyes will be on April servicer reports to see how securitization cash flows have been affected by the shutdown of most nonessential U.S. businesses and the resulting sharp increase in employee layoffs and furloughs during the month of March. We have little doubt that delinquency rates will be on the rise in most securitizations linked to consumer receivables (e.g., auto loans/leases, credit cards, student loans, unsecured consumer loans, and residential mortgages, etc.). However, the passage of the $2 trillion federal stimulus package—the Coronavirus Aid, Relief and Economic Security Act (CARES)—on March 27, as well as borrower tax refunds, should help soften the pressure on securitized cash flows over the coming months, but to what extent remains to be seen.
As events surrounding the crisis unfold, our thoughts are with the individuals and families who have been affected by the coronavirus (COVID-19).
To access the report, click here.
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KBRA is a full-service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider, and is a certified Credit Rating Agency (CRA) by the European Securities and Markets Authority (ESMA). Kroll Bond Rating Agency Europe Limited is registered with ESMA as a CRA.
Brian Ford, CFA, Structured Finance Research
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