Widespread collateral deterioration fuels European structured finance downgrades

Standard & Poor's Andrew South on European structured finance downgrades

Standard & Poor’s Ratings Services expects weak consumer demand and high government debt to hamper economic recovery, leading to sub-trend growth in Europe in 2010, and for the first half of 2011. We believe this will not lead to a tangible improvement in securitised collateral performance. Downgrades increased in European structured finance during Q4, as there were 1,574 rating actions, comprising 1,556 downgrades and only 18 upgrades. Collateral deterioration was the primary driver behind these rating actions. Collateralised debt obligations (CDOs) accounted for 70% of all downgrade...