Scope Report on NPL Collections
In August Loan Sale exceed judicial proceeds
Scope Ratings published its Report on Italian NPL Collection, the most relevant evidence is that in August proceeding coming from loan sales exceeded those from Judicial activity. The report shows the performance of a static universe of Italian NPL securitisations originated pre-Covid and rated by Scope and it is based on monthly servicing reports available to August 2022.
Collections on Italian NPL securitizations fell 35% between July and August, following the pattern seen in the same months of 2020 and 2021. August 2022 volumes were 61% higher than August 2021 mainly because of proceeds from one large note sale.
As noted in the last report of October, the reason for the fall in month-on-month collections between July and August each year is Italy’s nationwide summer vacation, when business activity drops significantly and court activity is limited to the most urgent proceedings. Once again, both factors affected the sector’s performance – regardless of servicers’ recovery strategies.
Collections in August 2022 were 61% higher than August 2021 volumes, however, due mainly to high proceeds from note sales, which accounted for 41% of total collections – above judicial (39%) and extra-judicial (20%) recoveries. Indeed, August 2022 saw note sales proceeds surpass proceeds from judicial strategies in volume terms for the first time. The sale of EUR 42m of credit notes in the Leviticus transaction represented almost all note sales for the universe of 20 transactions considered for the month in question (see Figure 8). As such, this could be considered an outlier.
That said, collections from credit sales in the first eight months of this year were 106% higher than the same period of 2020 and 42% higher than 2021 proceeds. Credit sales so far represent 12% of total collections in 2022.
The overall volume of collections for the January-August 2022 period has remained relatively stable since 2020. They are 4% higher this year than they were in 2021 and 6% higher than in 2020.
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Link to the Report
https://scoperatings.com/ratings-and-research/research/EN/172567