Have Reg Changes Narrowed Default Gap?

Regulatory changes limiting issuers' flexibility in supporting structured finance deals such as home equity/mortgage securitizations have contributed to narrowing the gap between the default rate of such bonds and that of unsecured corporate debt issues, an analyst told reporters at a June 18 news conference in New York.However, mortgage-related transactions may see less of a narrowing in the default rate gap vis-a-vis corporates than other types of structured finance because they are backed by relatively less volatile and more established asset types, Kevin P. Duignan, a managing director at Fitch Ratings, told MortgageWire. He added that, although the default rate gap between structured finance and corporates is narrowing, he believes the default rate of the former will continue to be somewhat more favorable than that of the latter.