OREANDA-NEWS. Fitch Ratings says in a new report that its rating Outlook for UK whole business securitisations (WBS) has moved to stable for 2016 (from negative) as a result of operating performance stabilisation, downgrades and restructurings during the previous year and the withdrawal of several underperforming transactions. Overall, Fitch expects ongoing stabilisation for Fitch-rated WBS transactions during 2016. However, macroeconomic and sector specific issues continue to threaten the sustainability of operating performance in many UK WBS transactions.

The sector Outlook remains Stable/Negative. In Fitch's view, some pubcos may underperform in 2016. Fitch expects the large tenanted pubcos to be negatively affected by the new market rent only option enacted in 2015, which could result in some profit transfer to tenants over time. Additionally, managed pubcos' margins may be directly pressurised as a result of the new living wage announced during 2015 (expected to reach GBP9 per hour by 2020 from GBP6.70 currently).

While the outlooks for other WBS sectors such as funeral services and crematoria, leisure and motorway service areas are stable, in Fitch's view they remain at risk from potentially constrained consumer spending if rising indebtedness is not matched by consistently increasing real wages.