Fitch boosts UK securities market

UK prime and buy-to-let securitisations have received a ratings boost from Fitch Ratings on a number of transactions.

The agency has acted on 36 prime and buy-to-let transactions including the upgrade of four tranches, two transactions, and affirmed 213 tranches, from 36 transactions.

The upgraded tranches are from two earlier vintage Paragon transactions that closed before 2005 which have seen strong credit enhancement growth along with good performance.

These transactions have still benefited from house price growth, despite the decline since the peak in 2007, and this has helped to support the performance of the underlying assets.

Fitch has also revised the outlook to positive of six tranches from three other Paragon series transactions where credit enhancement has grown since closing and positive rating action may occur if performance remains relatively stable.

The negative outlook on six tranches of transactions reflects relatively thin levels of credit support to the junior notes, from three more recent Paragon transactions.

Fitch has also revised the outlook to positive of six tranches from three other Paragon series transactions where credit enhancement has grown since closing and positive rating action may occur if performance remains relatively stable.

The negative outlook on six tranches of transactions reflects relatively thin levels of credit support from three more recent Paragon transactions.

Fitch says the actions reflect the continued stable performance of the UK prime and buy-to-let sector.

Although there has been a deterioration in arrears across many transactions it has been within a safe level and interest revenue has remained strong.

Volumes of repossessions on all transactions have also remained limited, with low interest rates and lender forbearance strategies helping mortgage payments.

Therefore transactions have not had to cover any material losses.

Fitch expects higher unemployment and interest rate rises to hit repossessions but the increase will be steady rather than a short-term stress.