Moody's Structured Thinking Covers 2016 Outlook
Moody's Investors Service has released the latest edition of its Structured Thinking: Asia Pacific newsletter, which covers the 2016 outlook for key structured finance market, including China, India, Korea, Singapore, Australia and New Zealand.In China, Moody's says the gradual economic slowdown will trigger a slight increase in delinquencies in 2016 from current low levels across a range of asset classes, including auto loan asset-backed securities (ABS) and collateralized loan obligations. Moody's expects a gradual slowdown in China in 2016, with growth at 6.3%, down from 6.8% in 2015.
The credit quality and performance of existing Chinese residential mortgage-backed securities (RMBS) will remain strong in 2016 despite the economic slowdown, because of the high quality of the underlying mortgage loans.
In India, delinquency rates for the assets backing Indian auto ABS and RMBS deals will decline in 2016, owing to stronger economic growth. Moody's forecasts that India's GDP will grow by 7.5% in 2016, up from 7% in 2015.
In Singapore, Moody's say the performance of CMBS transactions will deteriorate slightly in 2016 compared with 2015, owing to a more challenging economic environment, while covered bonds will perform strongly in 2016.
In Korea, Moody's says the performance of loans backing credit card ABS will be strong in 2016, aided by low unemployment and low interest rates. Korean covered bonds will perform strongly.
In Australia, Moody's Structured Thinking reports that the delinquency and default rates for RMBS and ABS will rise slightly from their current low levels in 2016, owing to below-trend economic growth and an uptick in unemployment.
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At the same time, the credit quality of Australian and New Zealand covered bonds will remain strong in 2016, because of the strong and stable financial standing of issuers, as well as the strong and stable sovereign credit quality of both countries.
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