Outlooks 2026: Global Structured Finance

Executive Summary

Global Structured Finance Outlook 2026 – Subdued growth, digital disruption will drive asset performance

With global growth remaining steady but subdued, the performance of structured finance transactions in 2026 will generally be stable. Among consumer transactions, lower interest rates will support performance in many jurisdictions, those in Europe will face more favorable labor market conditions than those in the US, and macroeconomic circumstances will differ across Asia-Pacific markets. Supportive financing conditions from declining interest rates will also bolster collateralized loan obligation (CLO) performance. The slower but continued economic growth and declining short-term rates will help commercial real estate (CRE) borrowers refinance, although delinquency rates will remain high. Meanwhile, private credit's growth will increasingly influence asset origination, and high demand for artificial intelligence (AI) and cloud computing will help maintain credit quality and performance in numerous corporate asset-backed security (ABS) sectors.

Key takeaways:

• Political polarization: In the US, shifting government policies will likely fuel consumer debt performance risks including labor market weakening, still-high borrowing costs and persistent affordability issues for consumer ABS and residential mortgage-backed securities (RMBS). In Europe, economic uncertainty will remain high because of an unstable geopolitical environment and ongoing trade conflicts. In Australia, asset performance will mostly improve, while in Japan it will be mostly stable. In China, performance will deteriorate moderately for outstanding auto ABS.
• Shifting financial landscape: Competition for quality assets within private credit and with broadly syndicated lenders will weigh on the credit quality of new debt issuances included in CLOs. Private credit-aligned sponsors' flexible funding and execution certainty has the potential to reduce issuance of more traditional ABS.
• Digital disruption: Rapid technological advancements, integration of AI technologies into wireless devices, and increasing needs for high-capacity fiber connectivity will continue to support wireless tower and fiber network ABS performance. Data centers have become a core property type within US single asset/single borrower (SASB) commercial mortgage-backed securities (CMBS), and financing demand for data centers will likely rise.
• Costly natural disasters: Even if outage frequency and revenue volatility rise from extreme weather and other climate-related events, utility cost recovery charge (UCRC) ABS transaction features will uphold new deal credit quality and maintain strong performance for existing transactions.

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