Securitization, the process of pooling various types of debt such as mortgages, car loans, or credit card receivables and selling the consolidated debt as bonds to various investors, plays a pivotal role in financial markets. It has the dual benefit of providing liquidity to markets that might otherwise be illiquid and offering investors diversified investment opportunities.

Explore the intricate world of the corporate and consumer debt securitization markets alongside Aaron Johnson, host of Moody’s Talks – Securitization Spotlight. Every month, Aaron will engage with Moody’s Ratings analysts and industry leaders to discuss various types of asset-backed securities (ABS), collateral loan obligations (CLOs), commercial real estate (CRE) securitizations (including commercial mortgage-backed securitizations, or CMBS), residential mortgage-backed securities (RMBS), covered bonds and more.

This series will dive into anticipated trends and challenges facing structured finance transactions in 2024 and beyond, highlighting the multifaceted effects of economic policies, structural shifts, regulatory changes, and geopolitical dynamics of the sector.

Higher-for-longer rates

The financial landscape will be marked by the repercussions of sustained high interest rates on obligors whose debt backs auto, credit card, and other consumer ABS transactions. Real estate sectors will also feel the pressure of these high rates, as will the speculative-grade corporate borrowers whose debt backs CLOs.

Structural shifts

The shift toward hybrid work models will weaken many office properties, while modest economic growth may support net operating income in other CRE sectors. The electric vehicle (EV) market will continue to influence US auto loan and lease ABS.

Reform and regulation

With the ever-evolving regulatory landscape a critical factor influencing securitization markets, changes in regulations can have profound implications for securitizations, both in terms of new issuance and performance. For example, adjustments to Basel 3.1 capital standards will reduce the risk of boom and bust property cycles, but result in tighter credit conditions for CRE.

As developments within securitization markets arise, Moody's Talks - Securitization Spotlight aims to be an essential resource for anyone looking to deepen their understanding of the securitization markets amidst complex and evolving economic conditions. Through expert analysis and discussion, the series will equip listeners with the knowledge needed to navigate these markets effectively. Whether you're a seasoned finance professional or an investor seeking to diversify your portfolio, this podcast series promises to deliver the analysis that matters, straight from the experts.

Tune in to the most recent episodes:

• Credit-risk transfer transactions’ prominence grows as regulations evolve
• Private credit CLOs becoming more likely in Europe as market grows
• Basel Endgame will smooth real estate cycles, create opportunities for non-bank lenders
• Cyberattacks on mortgage servicers are a risk to structured finance transactions

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