Fitch Ratings has warned that global structured finance asset performance is deteriorating across multiple sectors as rising energy prices, persistent inflation and weakening labour markets strain lower-income and highly leveraged borrowers, even as ratings remain largely resilient due to stronger credit protections.
In its latest Global Structured Finance Asset Performance and Forecast Monitor for the second quarter of 2026, the agency revised the asset performance outlook for 13 structured finance subsectors, moving 10 to “deteriorating” from “neutral” and three to “neutral” from “improving”. Of 91 subsector outlooks for 2026, 44 per cent are now classified as deteriorating, up from 33 per cent in December 2025.
Fitch said the macroeconomic fallout from the Iran war — particularly its impact on global energy prices, financial conditions and growth — is increasing downside risks for asset performance, although structured finance ratings remain supported by credit enhancement growth, continued deleveraging and robust structural protections.
Consumer And Property Pressures
In Europe, Fitch revised outlooks for auto loans, credit cards and unsecured consumer loans to deteriorating, citing expectations that recent borrower stress will persist through end-2026 as households absorb the effects of a challenging macroeconomic environment.
The outlook for non-industrial European commercial mortgage-backed securities (CMBS) was also cut to deteriorating. Fitch expects prime yields to rise as higher energy costs and inflation reverse recent interest rate declines, with limited offset from other market dynamics.
In the United States, the outlook for second-lien residential mortgage-backed securities (RMBS) securitisations was revised to deteriorating. Fitch said the sector remains particularly exposed because cash-out second liens reduce the protective buffer of property equity, making borrowers more vulnerable to macroeconomic stress.
Similarly, Australia’s non-conforming RMBS sector outlook was cut to deteriorating, with higher interest rates expected to weaken borrower performance through 2026.
Growth Outlooks Shift As Rates Stay Elevated
In Latin America, Fitch revised Colombian ABS and RMBS outlooks to neutral from improving, citing a sharp minimum wage increase that is likely to keep interest rates elevated and offset earlier performance gains.
Brazilian trade receivables were revised to deteriorating, with double-digit policy rates and rising corporate liquidity pressures expected to weigh on the sector through 2026.
Despite asset-level deterioration, ratings performance in the first quarter of 2026 remained robust across most sectors. Global structured finance upgrades outnumbered downgrades by more than four times, largely driven by US RMBS upgrades linked to improved borrower performance, paydowns and revised treatment of interest deferrals under Fitch’s criteria.
Downgrades were concentrated in the US CMBS sector, where they exceeded upgrades by 15 times, underscoring pockets of stress in property-linked exposures.
Fitch said structured finance ratings should remain largely resilient unless a prolonged Iran conflict triggers deeper macroeconomic disruptions.
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