SFA Webinar: From Consumers To Corporate Credit – the Impact of COVID-19 With Moody’s Investors Service

Join SFA and Moody’s senior analysts on Tuesday, May 5 at 4:00 PM EDT | 1:00 PM PDT for a discussion on the impact of COVID-19 on the various asset classes. Registration Closed.

Macro Outlook & Rating Approach in Turbulent Times:

• The combination of coronavirus, oil price shock and volatile market conditions is creating unprecedented levels of stress in credit markets and credit quality across sectors, regions and asset classes
• Corporates in tip-of-the-spear sectors like travel & tourism, retail, autos and oil & gas are most exposed.  Sovereigns and banks are less exposed relative to the global financial crisis
• Moody’s is taking a measured approach to rating actions, particularly for investment grade corporates; smaller weaker companies with speculative grade ratings account for most of the negative rating activity

Consumer ABS & RMBS:

• Impact of coronavirus on Structured Finance asset classes
• Shocks to asset performance will vary by asset class and pool composition
• Transaction parties and structures will influence credit impacts
• Fiscal stimulus plan and borrower relief programs have mixed impact
• Performance update

Corporate ABS:

• Wide variation in impact across sectors; some highly impacted – while some fairly insulated

CLOS & Leveraged Loans:

• Already weak credit quality heading into the current crisis will lead to a high number of defaults
• The significant presence of private equity in the loan market will result in many defaults due to distressed exchange 
• Weak capital structures (high proportion of 1st lien debt) will weigh negatively on loan recoveries
• CLOs challenged by coronavirus’ broad impact across industries
• CLO asset credit quality has weakened significantly, impacting mainly junior and mezzanine tranches
• Breakeven default analyses for CLOs show strength in senior notes

CMBS:

• CMBS key leading credit indicators – What are we seeing?
• Loans secured by hotel and retail properties, the most vulnerable property types to property cash flow disruptions are driving increased CMBS risk

Opening Remarks:

Kristi Leo, President, Structured Finance Association

Moody’s Speakers:

• Jim Ahern, Global Managing Director, Structured Finance
• Keith Banhazl, Managing Director, Head of CMBS Surveillance & CRE CLOs, Structured Finance
• Dev Chatterjee, Managing Director, Head of US Corporate Asset Securitization and CLOs Surveillance, Structured Finance
• Nicky Dang, Associate Managing Director, Head of Primary Consumer ABS, Structured Finance
• Jian Hu, Managing Director, Head of New Ratings for US Corporate Asset Securitization and CLOs, Structured Finance
• Kruti Muni, Managing Director, Head of Consumer ABS & RMBS Surveillance, Structured Finance
• Chris Padgett, Associate Managing Director, Head of Leveraged Finance, Corporate Finance
• Anne Van Praagh, Managing Director, Global Strategy & Research