Name: 2022 Credit Outlook: Investment Fund Debt – Rating Methodology and Outlook
Start: 2022-02-08T18:00:00Z
End: 2022-02-08T18:00:46.000Z
Location: BrightTALK
Rating: 5

Morningstar DBRS is a leading provider of independent rating services and opinions for corporate and sovereign entities, financial institutions, and structured finance instruments globally.  Rating more than 4,000 issuers and 60,000 securities, we are the fourth-largest credit rating agency in the world and a market leader in Canada, the U.S. and Europe in multiple asset classes.



Climate change presents both physical and transitional risks for the aviation industry. In striving to reach net zero by 2050, airlines are undergoing major technological transformation in the medium and long term. Physical climate risks continue to test the industry’s operational resilience while the evolving regulatory landscape could also negatively affect air travel demand.

Join us for a climate change webinar as we discuss Morningstar DBRS’ climate risk considerations for the airline and airport sectors, presented by Rohit Kumar, Assistant Vice President, Diversified Industries, Valiant Ip, Vice President, Asset Finance, and Kevin Li, Senior Vice President, Asset Finance. Our discussion will cover relevant industry trends, key drivers of decarbonization, potential credit impact and risk mitigations. Following the presentation, the audience is invited to participate in a Q&A session.

The Green Takeoff: Challenges and Opportunities for the Aviation Sector

German Banks have significant exposure to commercial real estate, including the office segment which is currently under pressure due to the hybrid work environment and higher interest rates. The US office market has experienced particular stress, which has adversely affected most German banks with operations in the US.

 

Join us for a discussion hosted by Erin Stafford, Managing Director, North American Real Estate Ratings and Sonja Förster, Vice President, European Financial Institutions. We will review trends in the US office market, the current financing situation for office properties, and the protection for lenders. We will then discuss the real estate exposure and performance of German banks, with particular focus on US office exposure.

German Banks’ CRE Lending: U.S. Office Loans Driving Increasing NPLs

In line with International Women’s Day, Morningstar DBRS researched female representation in the Canadian banking sector. While in Canada we see greater representation than global counterparts, there is still work to be done. Despite initial representation, gender diversity often stops progressing and hits a ceiling that is likely to bounce off. 

Join us for this Frontline Perspectives conversation hosted by Jiani Wu, Vice President, North American Financial Institutions and Sailie Ashtekar, Senior Analyst, North American Financial Institutions. We will review our findings, including data broken down by different levels of the talent pipeline. We will also explore how gender diversity can be attained at all levels of the banking organization including through DEI initiatives, stakeholder scrutiny and building an equitable talent pipeline. A Q&A will follow for all who wish to participate in the conversation.

Frontline Perspectives: Women at Canadian Banks: Fortified Glass Ceiling?

In February 2024, Morningstar DBRS published an updated methodology to rate subscription loans titled “Rating Debt Issued by Investment Funds, Appendix I – Subscription Loan Facilities”.  The updated methodology supersedes “Rating and Monitoring Subscription Loans (Capital Call) along with the predictive model, “Diversity Model for Capital Calls.” 

The changed methodology expands the criteria for the subscription loan asset class globally and moves the criteria to an appendix of the “Global Methodology for Rating Debt Issued by Investment Funds” (the Fund Methodology). With the move to an appendix of the Fund Methodology, the ratings assigned to subscription loan transactions will be corporate ratings instead of structured finance ratings. 

Join Morningstar DBRS for a Methodology Review webinar as we highlight the changes to our approach to rating and monitoring subscription loans. Presented by Jerry van Koolbergen, Managing Director, Structured Credit, and Stuart Rothenberg, Senior Vice President, Structured Credit, our discussion will feature the material changes including updates to (1) Morningstar DBRS’ approach for modeling high net-worth individuals (HNWIs), (2) the recovery rate and correlation assumptions for LP investors, and (3) the jurisdictions used for recovery rates. Additionally, the methodology update proposes the utilization of the CLO Insight Model to assess the credit risk of the LP investors and to derive a range of asset coverage ratios.

Following the presentation, the audience is invited to participate in a Q&A session to participate in the conversation.

Methodology Review: Subscription Loans

With the announcement of the Electric Vehicle Availability Standard, Canada joins the U.K along with other European and US jurisdictions in mandating a 100% zero-emission vehicle sales target for light-duty vehicles by 2035. The sale of fully or partially electric-powered vehicles is gaining traction in Canada, with most early adopters leaning toward hybrids instead of fully electrified vehicles. However, the U.K. and Europe are ahead in the transition and those insurers are already experiencing emerging effects. 

Join Morningstar DBRS for a discussion on how momentum in zero-emission and hybrid vehicle sales could affect Canadian auto insurance premium rates. We will review the implications for both buyers and insurers and explore nuances unique to the Canadian market, such as the highly regulated nature of the industry. The conversation will be moderated by Marcos Alvarez, Managing Director, Global Insurance Ratings, and will include Victor Adesanya, Vice President, North American Insurance Ratings and Robert Streda, Senior Vice President, Diversified Industries. A Q&A will follow for all who wish to participate.

Frontline Perspectives: How Will the EV Transition Effect Auto Insurance Rates?

In October 2023, Morningstar DBRS finalized its “Global Methodology for Rating CLOs and Corporate CDOs” (the CLO Methodology) and Morningstar DBRS CLO Insight Model.  We use both to assign new credit ratings and monitor outstanding collateralized loan obligation (CLO) credit ratings globally. 

We changed our methodology to expand our analytical approaches to address broadly syndicated loan (BSL) CLOs.  We also updated certain assumptions including default probabilities for publicly rated borrowers, recovery rates for covenant-lite loans, country tiering, industry classifications, credit dispersion, amortization and prepayment rates, and our surveillance approach.  The updated methodology addresses BSL CLOs, middle market and private credit CLOs, corporate significant risk transfer (SRT) transactions and middle market loan/BSL financing facilities.  

Join us on March 7 at 10:00 a.m. EST for a methodology review webinar as we explore Morningstar DBRS’ approach to rating CLOs, presented by Jerry van Koolbergen, Glen Leppert, and Carlos Silva. Our discussion will showcase the new analytical approaches and material changes to the CLO Methodology, including expansion in approaches to address BSL CLOs and MM CLOs.

Methodology Review: Collateralized Loan Obligations

Across commercial ABS, we have negative collateral performance outlooks on the equipment lease (primarily small ticket and transportation-backed transactions) and small business loan sectors, as we expect higher delinquencies and defaults coincided with lower recovery rates in 2024. However, we have stable credit rating outlooks on both sectors because of the relatively short term of collateral assets and generally deleveraging transaction structures. Meanwhile, we have stable outlooks on both aviation and 
 C-PACE ABS.

Join Morningstar DBRS at 2:00 p.m. EST for a Frontline Perspectives webinar on the U.S. Commercial ABS 2024 Outlook as we address the challenges facing each sector. Moderated by Stephanie Mah, Senior Vice President, Structured Finance Research, our presentation will include shared perspectives from  senior Morningstar DBRS analysts, presenting an overview of major factors affecting commercial ABS sectors including aviation, commercial PACE, equipment leases, and small business ABS. The discussion will be followed by a Q&A session for the audience to participate in the conversation.

U.S. Commercial ABS Outlook 2024

In the past several years, interest in rating transactions backed by data centers has surged, as these facilities are considered a critical component of digital infrastructure worldwide. Growth in the data center market is driven by several different factors, and technological advances within digital infrastructure will have impacts on credit risk and opportunities, especially with increasing capital costs to meet high power and processing requirements of AI. 

Join us on February 15 at 10:00 a.m. EST for a methodology review webinar as we explore Morningstar DBRS’s approach to rating data center transactions, presented by Ed Dittmer, Senior Vice President, North American CMBS, and Victor Leung, Senior Vice President, Infrastructure. Our discussion will showcase the different types of data centers and the analysis behind each, the unique rating approach to data center backed transactions, and the relevant considerations for how and when a methodology may be applied across sectors.  Following the presentation, the audience is invited to participate in a Q&A session to participate in the conversation.

Methodology Review: A Cross-Sector Primer on Data Centers

Join us for a discussion on large and medium-sized Canadian banks. 

The 2024 banking outlook and challenging operating environment is affected by a weakening economy, amid an uncertain macroeconomic outlook, along with an interest rate environment that has materially increased debt servicing costs. 

For Canadian banks, profitability will be pressured as credit quality deterioration progresses and results in higher provisions for credit losses.  Additionally, net interest income growth is likely to moderate on expectations of tepid loan growth and flattening net interest margins as interest rates stabilize and are potentially cut during F2024, while some fee income sources will likely continue to remain a headwind.  Expense discipline will be key as Canadian banks look to return to positive operating leverage. While the banks continue to maintain adequate liquidity and sound capital levels, heightened regulatory capital requirements are expected for the larger banks going forward.

The discussion will be followed by a Q&A for all who wish to participate, and a recording will be provided at the same link for those unable to attend.

2024 Canadian Banking Outlook

With a slowing macroeconomic environment, inflationary pressures, high interest rates, and geopolitical tensions in 2024, Morningstar DBRS anticipates another year of challenging conditions for U.S. corporate credit.

Please join Morningstar DBRS on January 31 at 2:00 p.m. EST for a Frontline Perspectives webinar on the Structured Credit Outlook for 2024, presented by Stephanie Mah, Senior Vice President, Structured Finance Research, and Jerry van Koolbergen, Managing Director, Head of U.S. Structured Credit. The presentation will include credit rating outlooks for Broadly Syndicated Loan (BSL) CLOs, investment fund debt, Middle Market CLOs, subscription loans, and resecuritizations, along and the key risks and opportunities that will shape the Structured Credit market in 2024. The discussion will be followed by a Q&A session for the audience to participate in the conversation.

Structured Credit Outlook 2024

Morningstar DBRS invites you to attend a webinar focusing on its 2024 Outlook for European Structured Finance and Covered Bonds on 31 January 2024 at 3:00 p.m. GMT, 4:00 p.m. CET, or 10:00 a.m. EST. 

The discussion will be led by the Morningstar DBRS’ European Structured Finance analytical team and will focus on expectations for 2024 and collateral performance and credit ratings outlook of various sectors for the year ahead in the European Securitisation and covered bond markets.

The discussion will last approximately 45 minutes and will be followed by an interactive question-and-answer session. Morningstar DBRS welcomes all who wish to participate.

WEBINAR DETAILS
Date: 31 January 2024
Time: 3:00 p.m. GMT / 4:00 p.m. CET / 10:00 a.m. EST

Credit Outlook 2024 - European Structured Finance and Covered Bonds

In 2024, the U.S. consumer will likely continue to be hampered by higher debt servicing costs, thereby moderating spending. We expect to see some deterioration in underlying consumer ABS collateral performance amid the backdrop of inflationary pressures and higher interest rates, particularly across subprime auto loans/leases and consumer loans.

Join Morningstar DBRS on January 30 at 2:00 p.m. EST for our credit outlook on autos, consumer lending, credit cards, and student loans presented by Stephanie Mah, Senior Vice President, Structured Finance Research, Ines Beato, Senior Vice President, U.S. ABS, and Jonathan Riber, Senior Vice President, U.S. ABS. A Q&A session will follow for the audience to participate in the conversation.

U.S. Consumer ABS 2024 Outlook

This session will provide an outlook for autos, capital goods, construction, property development and semi-conductors amidst a year that is characterized by high interest rates and continued economic headwinds. We will review factors that may influence performance of these individual sectors, touching on demand, spending and cost management, opportunities and new industry trends. We will follow with a Q&A for all who wish to participate.

Autos, Capital Goods, Semiconductor, Construction & Property Development Outlook

Despite a weak macroeconomic environment, the transportation industry should be relatively resilient in 2024. Airline sector growth should normalize in 2024 as the industry achieves full recovery to pre-pandemic levels. That said, potential headwinds that could impact the sector include a significant economic downturn and geopolitical tension escalations. 

On the railway front, railroads should push for price and productivity increases to compensate for the volume weakness. However, volumes may rebound by the second half of 2024, especially in rate sensitive sectors, as interest rate cuts start to materialize. Any volume rebound in conjunction with price actions and productivity improvements should help with the margins. 

We will follow with a Q&A for all who wish to participate.

2024 Airlines and Railways Outlook

The U.S. RMBS market, in tandem with the mortgage and housing landscape, enters 2024 on a slightly more positive note than the solemn tone from a year ago. It looked like H2 2022's dramatic downtrend in loan production and issuance was going to continue because of higher rates and volatility. However, as the year progressed, RMBS issuance seemed to settle into some semblance of a rhythm as monthly securitization volumes were steadier throughout 2023 versus 2022. 

Join us on January 25th at 2:00 p.m. EST for the U.S. RMBS Outlook for 2024, presented by senior analysts Mark Fontanilla, Derek Moran, and Adler Salomon. The webinar will include an overview of credit performance and predicted mortgage lending volumes, along with key risks and opportunities that will shape the U.S. RMBS market in 2024. The discussion will be followed by a Q&A session for the audience to participate in the conversation.

U.S. RMBS Outlook 2024

This session will explore how the latest consumer trends and ongoing macro-economic challenges are affecting different types of retailers as well as restaurants in terms of operating performances, capital allocation practices and consequently their credit risk profiles. The presentation will be followed by a Q&A for all who wish to participate.

2024 Retailers and Restaurants Outlook

This session will provide an overview of our outlook for the telecommunications sector, which acknowledges economic headwinds, but also highlights resiliency of the sector. The presentation will be followed by a Q&A for all who wish to participate.

2024 Telecommunications Outlook

Consumer behavior in response to a challenging macroeconomic backdrop is expected to vary across the spectrum of consumer products companies. This session will explore how changing consumer behavior will affect the operating performance and capital allocation of companies in this sector, and consequently the impact on their credit risk profiles. It will be followed by a Q&A for all who wish to participate.

2024 Consumer Products Outlook

The demand for direct lending funds and other vehicles that invest in middle market loans has increased, as banks have pared back lending to the sector after the global financial crisis. Meanwhile, institutional investors, such as pension funds, insurance companies, endowments, and alternative investment funds, have shown increasing interest in the middle market loan sector, driving demand for direct lending funds and other vehicles that invest in middle market loans.

Join DBRS Morningstar's Managing Director of Structured Credit, Jerry van Koolbergen and Senior Vice President of Global FIG, Lisa Kwasnowski for a discussion on our rating methodology for investment fund debt, an introduction to the analytical framework applied when rating direct lending funds, and the outlook on investment fund debt in 2022.

2022 Credit Outlook: Investment Fund Debt – Rating Methodology and Outlook

Middle Market Loans

Investment Fund Debt

Structured Credit

Credit Ratings

Welcome to the US financial advisor community on BrightTALK. Join the community to learn alongside thousands of financial advisors and registered investment advisors. Access relevant and timely content on investment products and strategies, regulations and compliance and the market landscape. You can also find practice management insights on topics such as client acquisition and retention, life planning, marketing and social media best practices.

US Financial Advisors

This community is for investors who work within the European market providing client and portfolio management advice. Join to learn from trusted investors on the latest trends and account strategies for delivering consistent results and long term success.

European Investors

This community is for institutional investors responsible for managing large-scale funds. Join to learn how top institutional investors are managing their organization’s shares, influencing the market, and what tips they have for successful investment strategies.

Institutional Investors

Get powerful banking and treasury insights for your business. Connect with experts and colleagues to get the most up-to-date knowledge on hot topics such as digital banking, payments disruption and non-bank competition. Learn how the latest treasury management strategies are helping to mitigate operational, financial and reputational risk.

Banking and Treasury

The accounting and finance community on BrightTALK features presentations from leading accountants and finance professionals. The accounting community includes tax planning strategies, QuickBooks webinars and other accounting webinars, while the finance community features presentations on financial capital regulations and forensic data analytics. Join the conversation by attending live financial and accounting presentations and connecting with industry thought leaders.

2022 Credit Outlook: Investment Fund Debt – Rating Methodology and Outlook

Presented by

About this talk

More from this channel