...Sensitivity to Prolonged Low Oil Prices: What if oil prices remain at or around $50 per barrel for a further 2-3 years after their plunge by more than 50% since mid-2014? This report assesses the potential impact on global structured finance (SF) and covered bond (CVB) asset performance and ratings if such a scenario were to arise. Several common themes are highlighted that are broadly relevant across asset classes and regions, with a more detailed look at several sectors where assets may be affected more directly. Consumer Debt Payments Easier: Lower gas prices and heating oil costs make it easier for households to make debt service payments. All else being equal, given that most structured finance and covered bond issuance is concentrated in economies that are not highly dependent upon oil export revenues, there will be a positive impact on consumer default rates. Performance of consumer asset classes -- such as credit cards, auto loans, and residential mortgages -- will benefit. Growth...
