Credit conditions in the U.K. are projected to remain stable in 2020 even as the economy slows down on the back of high consumer debt levels, Moody's said in a report.
Moody's expects issuance to remain flat year over year in 2020 among most U.K. sponsors, and an increase in the number of auto asset-backed securities, or ABS, and small to medium-sized enterprise ABS deals.
While low unemployment and interest rates will support credit conditions, challenges stemming from Brexit will continue to weigh on consumer confidence and housing activity, the rating agency said.
Consumer indebtedness remains high despite a drop in consumer credit growth to around 6% in mid-2019 from double digits in 2017, the agency noted. Regulations such as minimum energy efficiency standards that benefit tenants are set to raise costs for landlords, which is a "credit negative" for U.K. buy-to-let residential mortgage-backed securities, Moody's said.