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Something from the FT.  And so it starts....................

Moody’s has lowered its outlook for a large part of the UK structured finance sector to negative from stable, citing higher household indebtedness and a weaker macroeconomic backdrop. The rating agency expressed concerns over the collateral for a range of structured finance sectors, where loans are packaged up and sold on as bonds on the capital markets. It has reduced its outlook from stable to negative for asset-backed securities based on auto loans, credit cards, buy-to-let mortgages and so-called “non-conforming” mortgages that do not meet high street lending standards.

“Rising levels of household indebtedness and a weaker macroeconomic environment are the key drivers behind our decision…,” Moody’s said on Monday. It pointed to an economic environment in which “higher inflation, weaker wage growth and levels of indebtedness leaves those in lower-income brackets the most exposed”. The Bank of England has recently expressed concerns over faster than expected levels of consumer credit growth in the UK, which has outpaced household income growth. Moody’s decision is a sign that such issues are seeping into the UK’s structured bond markets, which is an important source of funding for consumer borrowing. The bonds are typically bought by institutional investors, including pension funds and insurance companies, as well as banks.

The rating agency also said that macroeconomic disruption from Brexit negotiations could be significant, pointing to a “substantial probability that negotiations will fail and no agreement will be reached”.


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  • The Prime Minister stated that there were three Brexit options available to the UK:   295 members have voted

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