Moody’s Investors Service [1] has released a Sector Update for Q3 2017, revealing a slight decrease in residential mortgage-backed securities (RMBS) issuance over Q2 2017. However, compared to Q3 2016, issuance is up by approximately 51 percent.
New issuance in Q3 consisted mainly of “prime jumbo, government-sponsored entities (GSEs), credit-risk transfer (CRT), seasoned performing and re-performing transactions.” Q3 2017 saw 26 RMBS transactions issued, down from 28 in Q2 2017. A total of 74 private-label RMBS “backed by varying types of collateral and CRT deals” have been issued since the beginning of the year. Twenty-nine were CRT or Prime Jumbo deals. Seasoned performing and re-performing and non-prime deals have also seen an increase in issuance compared to a year ago.
According to Moody’s Sector Update:
- Prime issuance was up compared to the same period in 2016. Nine prime jumbo transactions were issued in the first half of 2017. In Q3 2017, that number was six.
- The single-family vacancy rate remains stable and the tenant delinquency rate is low.
- Five CRT transactions were issued during Q2 2017.
- Two non-prime transactions were issued during Q3 2017.
- Non-traditional issuance was active in Q3 2017.
Moody’s Sector Update for Q3 2017 also addressed the potential impact of hurricane season. While Hurricanes Harvey and Matthew were expected to have little impact on the RMBS transactions rated by Moody’s, the Update states, “Hurricane Irma may raise risk for RMBS transactions we rate through moderate to large exposure to Florida. Because many of these deals … are already performing poorly, temporary increases in delinquencies and increases in liquidation timelines would have just a marginal impact.”
You can learn more about Moody’s research here [1].