Falling oil prices continue to dominate economic news, with little effect yet on securitization credit, S&P said.
The drop in energy prices is favorable for consumer spending and overall growth, but has negative implications for real estate in regions with high energy job concentrations and for the credit of some energy sector companies.
For U.S. CLOs, average exposure to energy companies is less than 4%, in S&P's estimate, compared to the 17% overall HY exposure. The oil and gas companies with the highest exposures in U.S. CLOs have not yet had any change in ratings.
Oil dropped more than 4% Friday after the IEA reduced its 2014 demand forecast, with NYMEX crude closing at $57.49/bbl, down 41% from this year’s peak. The yield on the 10-yr. UST closed at 2.08% Friday, down 23bp w/w.
The S&P 500 fell 3.5% w/w, the worst week since 2012, after setting a record the previous week. Regular gas prices averaged $2.58/gal. on Dec. 12, down 13 cents w/w, $1.10/gal. below the summer peak, and down more than 60 cents y/y.
Global structured finance issuance was $11bn last week, $1bn above the YTD weekly average. U.S. issuance was led by $4bn of CMBS and $3bn of CLOs. European securitization was €1.3bn. Pipelines are emptying as year-end approaches, with $3bn of U.S. CMBS and less than $1bn of U.S. ABS currently in the market, according to Bloomberg.
The FOMC announcement on Wed. is the highlight of the week. U.S. releases include CPI, housing starts, and leading indicators. European releases include U.K. house prices, EU27 new car registrations, and Eurozone CPI and construction.
Photo Credit: Arabianeye-Reuters
The drop in energy prices is favorable for consumer spending and overall growth, but has negative implications for real estate in regions with high energy job concentrations and for the credit of some energy sector companies.
For U.S. CLOs, average exposure to energy companies is less than 4%, in S&P's estimate, compared to the 17% overall HY exposure. The oil and gas companies with the highest exposures in U.S. CLOs have not yet had any change in ratings.
Oil dropped more than 4% Friday after the IEA reduced its 2014 demand forecast, with NYMEX crude closing at $57.49/bbl, down 41% from this year’s peak. The yield on the 10-yr. UST closed at 2.08% Friday, down 23bp w/w.
The S&P 500 fell 3.5% w/w, the worst week since 2012, after setting a record the previous week. Regular gas prices averaged $2.58/gal. on Dec. 12, down 13 cents w/w, $1.10/gal. below the summer peak, and down more than 60 cents y/y.
Global structured finance issuance was $11bn last week, $1bn above the YTD weekly average. U.S. issuance was led by $4bn of CMBS and $3bn of CLOs. European securitization was €1.3bn. Pipelines are emptying as year-end approaches, with $3bn of U.S. CMBS and less than $1bn of U.S. ABS currently in the market, according to Bloomberg.
The FOMC announcement on Wed. is the highlight of the week. U.S. releases include CPI, housing starts, and leading indicators. European releases include U.K. house prices, EU27 new car registrations, and Eurozone CPI and construction.
Photo Credit: Arabianeye-Reuters
Source:
Mubasher
