Global structured finance, 2024 Outlook (2024)

FAQs

What is the outlook for structured finance in 2024? ›

S&P expects 2024 issuance to grow a further 11.8% y/y to EUR95bn owing to (1) a larger volume of legacy transactions reaching their call dates and (2) a modest recovery in areas of credit origination such as auto financing that back most ABS issuance.

Overall, while there may be some headwinds, the outlook for structured finance in 2024 appears cautiously optimistic. Opportunities exist across various segments, with private credit expected to remain a key player.

“In 2024, we expect the overall stable trend of our rated project finance portfolio will continue as a majority of the rated transactions are contracted, with no direct exposure to market volatility, so the underlying cash flows will be stable,” said Biao Gong, Senior Vice President, Project Finance.

New asset-backed securities (ABS) business totaled a preliminary $85.6 billion in Q1 2024, representing an increase of 30.5% over the $59.3 billion seen in Q1 2023, according to preliminary figures from the Asset Securitization Report's deal database.

Fitch lowers its forecast for CMBS loan delinquencies to 3.7% in 2024 and 4.2% in 2025. Previously, Fitch had forecast 4.5% in 2024 and 4.9% in 2025.

Overall employment in business and financial occupations is projected to grow faster than the average for all occupations from 2022 to 2032. About 911,400 openings are projected each year, on average, in these occupations due to employment growth and the need to replace workers who leave the occupations permanently.

We are forecasting only modest (single-digit) growth in global structured finance issuance volume to roughly $1 trillion in 2024. Interest rates, regulations, consumer credit, and geopolitical uncertainty are some of the topics we are monitoring in 2024, among others.

Structured credit products can expose an institution to other forms of risk, such as market risk, liquidity risk, and operational risk-- risks that have generated significant losses during the recent credit market turmoil.

The estimated total pay for a Structured Finance Analyst is $135,822 per year, with an average salary of $92,206 per year. These numbers represent the median, which is the midpoint of the ranges from our proprietary Total Pay Estimate model and based on salaries collected from our users.

Recent signals point to an uptick in economic activity and a firming of inflation persistence, leading Vanguard to increase its outlook for 2024 GDP growth, from 0.3% to 0.7%, and its outlook for year-end core inflation, from 2.6% to 2.8%.

What is the financial outlook for 2025? ›

The 2024–25 Outlook

We expect growth to rebound to a 2.0 percent pace by 2025Q1 and stay in that range through yearend. On a Q4-to-Q4 basis, real GDP grows by 1.8 percent during 2024 and 2.2 percent during 2025.

We expect inflation to slow further in 2024, but at the cost of a weaker labor market. The unemployment rate has increased by more than half a percentage point from a near-record low of 5% since the start of 2023. We expect further rises amid slow economic growth.

The S&P 500 generated an impressive 26.29% total return in 2023, rebounding from an 18.11% setback in 2022. Heading into 2024, investors are optimistic the same macroeconomic tailwinds that fueled the stock market's 2023 rally will propel the S&P 500 to new all-time highs in 2024.

Moving forward, the market is likely to remain sensitive to political developments, but the long-term outlook remains positive given the fundamental strength of the economy and robust corporate performance.

Commercial banks regularly originate and securitize auto loans, credit card receivables, trade receivables, mortgage loans, and more recently small business loans.

2024 is expected to be a strong year for new issuance, refinancing and resets in Europe as certain bottlenecks to CLO creation are cleared. The attractiveness of the current opportunities in CLOs cannot be understated.

The convergence of customer demands, technological advances, and government choices will significantly impact the direction of the financial industry market trends in 2024. The financial services market is projected to grow from $25,848 billion in 2022 to $37,484 billion in 2027 at a CAGR of 7.5%.

Within hard-asset ABS sectors, economic growth and business conditions are expected to be modest headwinds in 2024 while tighter lending standards should be supportive of overall credit performance.

Securitized markets participated in the year‑end cross‑asset rally, leading to gains for 2023. After a relatively light 2023, issuance is expected to pick up a bit in 2024, but technicals remain positive.