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Climate Change Risks for Structured Finance: a Primer

Tue 23 Nov, 2021

Fitch Ratings expects climate change risks to become increasingly prominent for structured finance and that they could start to have discernible credit implications for deals issued in the next 10 years.

Any direct negative impact from climate change risks on the current stock of rated structured finance notes is likely to be small. Nevertheless, as the materiality of the risks intensifies, their effect on asset performance could become a secondary or even a key rating driver for some future rated notes, especially where portfolios are exposed to those areas most vulnerable to the consequences of climate change. Fitch expects policy risk to be the first to become relevant for structured finance transactions.

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