On Oct. 30, 2020, S&P Global Ratings published a request for comment (RFC) on its proposal to expand the scope of its global methodology and assumptions for assessing pools of residential loans to include Spain, Portugal, Italy, and Greece. The RFC, "Request for Comment: Global Methodology And Assumptions: Assessing Pools Of Residential Loans (Spain, Portugal, Italy, And Greece)," included proposed guidance for the application of the criteria in these four countries. In the RFC, we encouraged market participants to submit their written feedback to us by Nov. 30, 2020.
Following feedback from market participants, we finalized and published our criteria, "Global Methodology And Assumptions: Assessing Pools Of Residential Loans," on Jan. 8, 2021. We also finalized and published the guidance article, "Guidance: Global Methodology And Assumptions: Assessing Pools Of Residential Loans," to explain how we apply the criteria to pools of Spanish, Portuguese, Italian, and Greek residential mortgage loans. The guidance is not criteria, but it is intended to be read in conjunction with the criteria. For further information on guidance documents, see "Criteria And Guidance: Understanding The Difference."
We'd like to thank investors, issuers, and other intermediaries who provided feedback. This RFC Process Summary provides an overview of the written comments we received from the market on the proposed criteria, the significant analytical changes, if any, we made following the RFC period, and the rationale for those changes. In addition, this RFC Process Summary also provides a summary of the significant changes, if any, we made to the guidance article following the RFC period.
Written Comments Received From Market Participants That Led To Significant Analytical Changes To The Final Criteria
We did not receive any external written comments from market participants that led to significant analytical changes to the criteria.
Written Comments Received From Market Participants That Did Not Lead To Significant Analytical Changes To The Final Criteria
A respondent questioned our approach for indexing property valuations in situations where recently updated full valuations are provided, and the respondent suggested that the updated valuations should be considered. We believe that the criteria already address such situation. Specifically, paragraph 100 in the criteria establishes how we consider updated property valuations in our analysis when they are provided.
We therefore made no change in our final criteria as a result of this comment.
Significant Analytical Changes To The Final Criteria That Did Not Arise From Market Feedback
We finalized and published the final criteria without making any significant analytical changes to the criteria that are unrelated to the external written comments or other market feedback we received.
Significant Changes To The Guidance Document
We published a guidance article separate from the final criteria, "Guidance: Global Methodology And Assumptions: Assessing Pools Of Residential Loans." The guidance is not criteria, but it is intended to be read in conjunction with the criteria. For further information on guidance documents, see "Criteria And Guidance: Understanding The Difference."
We made changes to the guidance for Spain, Portugal, Italy, and Greece compared to the proposed guidance in our RFC. We made these changes to clarify certain information, and we do not consider these changes to be significant. For example, we clarified that the Portuguese archetypal pool consists of loans for which affordability was assessed and the borrowers have no adverse credit histories. For Portugal and Spain, we clarified that the archetypal loan is euro-denominated. For Greece, we clarified that the higher commercial adjustment factor applies to loans that are granted to self-employed borrowers, in case of joint characteristics. For all four countries, we clarified the application of the reperforming adjustment when the lookback period is over 60 months. Finally, for all four countries, we also clarified that the current loan-to-value calculation incorporates any applicable valuation haircuts, and we clarified the language regarding forced-sale discounts.
In addition, we made changes to the presentation of the information in the published guidance article because it has a different format from the RFC. The published guidance article includes a general section pertaining to all European countries and separate country-specific sections. The changes to the presentation of the information did not affect the assumptions we had outlined in the RFC.
None of these changes resulted from an external comment.
This report does not constitute a rating action.
|Spain And Portugal Analytical Contacts:||Isabel Plaza, Madrid + 34 91 788 7203;|
|Fabio Alderotti, Madrid + 34 91 788 7214;|
|Italy Analytical Contacts:||Giuseppina Martelli, Milan + 390272111274;|
|Benedetta Avesani, Milan + 00390272111258;|
|Greece Analytical Contacts:||Marta Escutia, Madrid + 34 91 788 7225;|
|Adriano Rossi, Milan + 390272111251;|
|General Analytical Contacts:||Alastair Bigley, London + 44 20 7176 3245;|
|Elton Eakins, London + 44 20 7176 3698;|
|Roberto Paciotti, Milan + 390272111261;|
|Barbara Florian, Milan + 390272111265;|
|Methodologies Contacts:||Herve-Pierre P Flammier, Paris + 44 20 7176 7338;|
|Katrien Van Acoleyen, London + 44 20 7176 3860;|
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