Scope Ratings on NPL Collections
May-July volumes stable but recovery strategies have changed
Scope Ratings has published a new issue of its report monitoring collections on Italian NPL transactions.
Collections on Italian NPL securitisations fell 24% in July versus June but rose 7% year on year. Volumes in the May-July quarter have been stable (EUR 459.9m in 2020, EUR 463.8m in 2021 and EUR 459.3m this year) but there has been a change in recovery strategies.
Special Servicers have increased their reliance on extra-judicial routes since the Covid-19 outbreak to compensate for lower judicial proceeds, at the expense of profits. They did this to adjust to the changed macroeconomic environment. The pandemic caused material backlogs in court proceedings and impacted borrowers’ affordability.
From May to July 2020, almost 70% of collections stemmed from judicial recoveries, mainly disbursement of cash in court, as most court proceedings were suspended.In 2021 and 2022, extra-judicial proceeds have increased by a third to 40%.
In the medium to long term, we expect extra-judicial strategies will continue to gain share as increased uncertainty and higher risk premiums will incentivise servicers to accelerate collections.
Thes report shows the performance of a static universe of Italian NPL securitisations originated pre-Covid and rated by Scope. The report is based on monthly servicing reports available to July 2022.
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Link to the full report
https://scoperatings.com/ratings-and-research/research/EN/172260