Fitch: Canada Structured Finance Faces Macro Woes in 2016

NEW YORK--(BUSINESS WIRE)-- Link to Fitch Ratings' Report: 2016 Outlook: Canada Structured Finance (Macroeconomic Factors Pose Risk to Stable Outlook)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=874216

Numerous macro concerns will be foremost on Canadian investors' minds in the coming year, though none should dent the stable outlook for Canadian structured finance, according to Fitch Ratings in its 2016 outlook report.

Fitch projects stable credit performance across all Canadian structured finance sectors next year, with all sector Rating Outlooks either Stable or Positive. Securitization activity will continue to increase, with new deals likely to emanate from the ABS and CMBS sectors. That said, the aforementioned macro woes bear close watch, according to Managing Director Michael Dean.

'High household leverage is a notable risk to the Canadian economy with the ratio of debt to disposable income at a record high of 164% in 2015,' said Dean. 'Canadian consumers are facing higher household debt due primarily to rapidly rising mortgage borrowing .'This, however, should not affect performance of Canadian credit card ABS, with delinquencies and chargeoffs still exceptionally low and monthly payment rates often in excess of 30%.'

Fitch views Canadian home prices as much as 20% overvalued. That said, 'The economy is in a good position to weather a housing downturn primarily because the mortgage market does not have significant exposure to riskier mortgage products that would be at high risk of default,' said Dean. That sentiment is unlikely to change in the foreseeable future. Despite efforts to develop an RMBS market in Canada, there were no securitized deals in 2015. This makes covered bonds likely the only RMBS market in Canada for the foreseeable future, with issuance among the big banks likely to remain brisk.

Fitch sees no material risks for Canadian auto ABS next year despite concerns about some areas of the broader economy. Canadian consumers are showing great discipline in paying their auto debts, which along with a healthy wholesale vehicle market will support asset performance in 2016. The same stable outlook for next year holds true for Canadian CMBS.

'2016 Outlook: Canada Structured Finance' is available at 'www.fitchratings.com' or by clicking on the above link.

Additional information is available on 'www.fitchratings.com'.

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

View source version on businesswire.com: http://www.businesswire.com/news/home/20151210005865/en/

Fitch Ratings
Michael Dean
Managing Director
+1-212-908-0556
Fitch Ratings, Inc., 33 Whitehall Street, New York, NY, 10004
or
Media Relations:
Sandro Scenga, +1 212-908-0278
[email protected]

Source: Fitch Ratings

---

Serious News for Serious Traders! Try StreetInsider.com Premium Free!

---

You May Also Be Interested In

• Delek Logistics Partners, LP Announces Pricing of Public Offering of Common Units
• Duolingo Invests in World-Class Motion Design with Acquisition of Animade
• Genconnect Brings Cisco and Microsoft Know-How to Sydney AV Installs