In Q2 2008, the sector displayed an average Constant Prepayment Rate of 3.40%. Prepayments are not a contractual provision in Italian leasing contracts, but have to be agreed with the originator each time that prepayments are considered. This market characteristic explains the general low levels in prepayments that are seen in this sector.
Typical Italian leasing backed securitizations hold a portfolio which comprises three types of assets: Auto, Equipment and Real Estate. However, some transactions hold only single pools, which may also comprise these three types of assets. Moody's Economy.com is forecasting that GDP growth in Italy will slow to 0.4% this year, from 1.4% last year. This is on the back of weaker private consumption, fixed investment and export growth. 'Italian business confidence remained on a downward trend in July, falling to its lowest level in over six years,' says Nitesh Shah, a Moody's Economist and co-author of the report. Furthermore, he adds 'since a majority of the leases in this segment are utilised for commercial purposes, this development might have an impact on the Italian leasing ABS market.'
