IGM Special Report: European Structured Finance Q3 2020 Review

This report provides an overview of European structured finance in Q3. Despite a flurry in activity in July and late September boosting Q3, the market is still lagging behind 2019 by 35%. Specialist supply drives the UK.

• July and late September flurry boosts Q3, but market still lagging 2019 by 35%
• Specialist supply drives UK, RMBS still leads the way but Dutch, French and Irish supply recommences
• CLOs regather poise with biggest and tightest deals since end of Q1
• Autos gaining traction – full stack, debut and hiatus-ending trades
• Seven technical standards signed off in securitisation regulation

As with the end of Q2, the completion of Q3 was marked by some unsettling milestones. Before the end of September, global Covid deaths passed one million according to John Hopkins University. At the end of Q2 more than 500,000 deaths had been reported with over 10 million cases. Three months later and the number of deaths has doubled and the confirmed cases more than tripled to over 33 million. The easing of restrictions in many countries in the very late stages of Q2/early Q3 fuelled another spike in the transmission rate and the reintroduction of varying degrees of restrictions and amendments to the safe travel lists.

Throw into the mix the pending US election (with the added uncertainty stemming from President Trump's Covid-19 diagnosis), continuing trade tensions, Brexit, the severe impacts on global economies and the uncertainty of the path of recovery and it has made for a difficult time in the markets and is likely to continue to do so in the run up to the end of the year. Public programmes such as job retention schemes and mortgage support programmes have cushioned the blow to some extent, but many people remain in financial hardship and the schemes are either being adjusted or rolling off. This places additional scrutiny on deal performance where rising arrears have already become evident. Read more…