Mortgage holidays to ‘negatively affect’ covered bonds

HouseRain_Adobe_575x375
By David Freitas
29 May 2020

Features in UK covered bond programmes offer limited protection and could lead to a delay in the classification of defaulted loans, Moody’s said this week. Meanwhile in Europe, regulators have muddied the waters on payment moratoria legislation.

According to Moody’s, around 15% of UK mortgages are on payment holidays, which is affecting a similar percentage of mortgages in UK cover pools.

Delayed payments leads to a reduction of cash flow into cover pools cash flow and will “negatively affect covered bonds”, said the ratings agency.

...

Already a subscriber?

Continue reading this article

Try full access to GlobalCapital

Free trial