Fitch: Coronavirus containment actions pose a material risk to global structured finance

Considering the global efforts to tame the negative implications of the coronavirus (COVID-19), global rating giant Fitch came out with further warnings at the start of Friday’s Asian session.

Key quotes

The asset performance of almost 90% of structured finance (SF) transactions globally have high or moderate vulnerability to disruptions as a result of the coronavirus and containment efforts, according to a recent report by Fitch Ratings. 

The report categorizes each sector's asset performance vulnerability to the effects of a temporary coronavirus disruption scenario, including travel restrictions, business and school closures, and a moratorium on large gatherings in major metropolitan areas in all countries around the globe.

Fitch recognizes the growing risk of a more severe and sustained scenario and is currently analyzing the asset performance and rating implications of more protracted scenarios that will be explored in upcoming research and commentary.

Market implications

Following the day of losses and magnified risk-off, the global markets seem to catch a breath amid a lack of major trading activity during the Asian session. Hence, the news fails to have a major impact on the trading, which ideally should have strengthened the risk aversion wave.