Investors
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STS synthetics proposals published
Sector developments and company hires
STS synthetics proposals published
Market Moves 6 May 2020
The EBA has published its proposals for developing an STS framework for synthetic balance-sheet securitisations, which includes the criteria to be considered when labelling a transaction as ‘STS' and provides the pros and cons of a potentially differentiated capital treatment for this type of securitisation. Among the proposed STS criteria are requirements on simplicity, standardisation and transparency .......
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Ladder locks in financing
Sector developments and company hires
Ladder locks in financing
Market Moves 5 May 2020
Ladder Capital has entered into a strategic financing arrangement with Koch Real Estate Investments, under which Koch will provide the company with approximately US$206.4m in senior secured financing to fund transitional and land loans. As part of the strategic financing agreement, Koch has the right to make a US$32m equity investment in the Ladder at any time .......
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Romanian SRT inked
Uncapped guarantee completed
The EIF and nine Romanian banks have completed an uncapped guarantee agreement from the SIUGI programme that covers 60% of a €1.368bn portfolio of Romanian SME credit rights. The banks originating the SME credit rights under this initiative are Banca Transilvania, Banca Comercial Romana, BRD – Group Societe Generale, ING Romania, ProCredit, Raiffeisen Bank Romania, Libra Internet Bank, UniCredit .......
News 5 May 2020
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On hold
Italian NPL ABS to pick up next year
Italian non-performing loan securitisations are anticipated to drop by 50%-70% this year, compared to 2019, as the Covid-19 fallout puts bank deleveraging plans on hold (SCI passim). However, NPL ABS issuance is expected to pick up next year.
According to Scope Ratings: “We do not expect Italian NPL securitisations to reach the levels of 2018-2019. Activity may increase .......
News 4 May 2020
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Income slashed for Fannie and Freddie
Q1 results at the GSEs reflect Covid 19 carnage
Fannie Mae today (May 1) reported that profit plunged in Q1 2020 to $461m compared with $4.4bn in Q4 2019.
The GSE said that the decrease in net income was due to a shift from credit-related income to credit-related expense resulting from the “economic dislocation caused by the Covid 19 outbreak.”
It estimates that around 7% of .......
News 2 May 2020
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MBS overvaluation case settled
Sector developments and company hires
Overvaluation case settled
Market Moves 1 May 2020
The US SEC has accepted an offer of settlement from Semper Capital Management in connection with administrative and cease-and-desist proceedings against it. On the basis of the offer, the Commission finds that from July 2013 through May 2014, Semper overvalued certain odd lot positions in securities held by the Semper MBS Total Return Fund (SEMMX), which caused .......
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Landmark guidance
Implicit support guidelines published
The EBA has published landmark implicit support guidelines as part of its post-coronavirus interventions. According to the paper, banks postponing or reducing payments due to payment moratoria wouldn’t automatically be regarded as providing implicit support, since - by definition - such moratoria are not aimed at reducing any actual or potential losses to investors. Nevertheless, banks will still have .......
News Analysis 1 May 2020
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Manager scrutiny
CLO manager performance on watch
CLO manager scrutiny is growing just as market conditions make their job harder. Nevertheless, differentiation is set to accelerate as investors have to adapt the way they assess management performance.
Jason Merrill, investment specialist at Penn Mutual Asset Management, says: “This pandemic is obviously very unusual and has thrown the market into a downturn. Winners will be those .......
News Analysis 30 April 2020
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Unlocking capital
Premod Thomas, ceo of Bayfront Infrastructure Management, answers SCI's questions
Q: Bayfront Infrastructure Management is seeking to help address an infrastructure financing gap in the Asia-Pacific region (SCI 29 April). Can you explain what you mean by this?
The Structured Credit Interview 30 April 2020
A: According to the Asian Development Bank, Asia will need approximately US$1.34trn annually in infrastructure financing between 2016 and 2020 to sustain economic growth. This represents approximately 6% of the region’s .......
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Prudential flexibility reiterated
Sector developments and company hires
Prudential flexibility reiterated
Market Moves 29 April 2020
The European Commission has adopted a package to help facilitate bank lending to households and businesses throughout the European Union that includes an Interpretative Communication on the EU's accounting and prudential frameworks, as well as targeted ‘quick fix’ amendments to the CRR, in order to maximise the ability of banks to lend and absorb losses related to .......
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Growth phase
Asian infrastructure loans eyed
Singapore-based Clifford Capital has established a holding company structure under Clifford Capital Holdings (CCH) to drive its next phase of growth. The firm plans to expand into new business lines, including the securitisation of infrastructure loans through Bayfront Infrastructure Management and the provision of private credit and mezzanine financing solutions through Keppel-Pierfront Private Credit Funds (SCI 1 April).
News 29 April 2020
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Securitisation support
AOFM initiatives to boost volumes
The Australian Office of Financial Management has acted quickly to support the Australian securitisation market amid the coronavirus fallout. Indeed, a boost to both primary and secondary ABS volumes is expected as a result of its A$15bn Structured Finance Support Fund (SFSF) initiative (SCI 30 March) and the proposed Forbearance SPV respectively.
Martin Jacques, director, head of .......
News Analysis 28 April 2020
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Opportunistic buying
Covid-19 kicks off secondary SRT market
Capital relief trade secondary market activity has received a boost from the coronavirus fallout as primary issuance remains largely on hold until the second half of the year. The trend is driven by a variety of factors, including opportunistic buying and portfolio rebalancing (SCI 15 April).
“The secondary SRT market was similar to other fixed income markets. .......
News Analysis 28 April 2020
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Inventory ABS prepped
Sector developments and company hires
Inventory ABS prepped
Market Moves 24 April 2020
Fintech platform Supply@ME Capital (SYME) has entered into an agreement with StormHarbour Securities for the issue, distribution and placing of a series of ABS that are guaranteed against inventories purchased directly by the platform's SPVs (SCI 15 April). Details of the securitisation programme are being finalised, but it is anticipated to cover - within 12 months .......
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Recovery boost
Weatherford revolvers fully repay amid negative outlook
A new case study from SCI has revealed that oil and gas firm Weatherford International is referenced in a capital relief trade following the company’s successful emergence from bankruptcy in December 2019. The revolvers that backed the SRT deal have fully recovered after the chapter 11 restructuring, although the factors that led the company into bankruptcy - including low .......
News Analysis 24 April 2020
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Grandfathering for Dutch CLO issuers
Sector developments and company hires
Grandfathering for Dutch CLO issuers
Market Moves 23 April 2020
The Dutch tax authorities have provided written confirmation to CLO issuers domiciled in the Netherlands that their recently revised position on the VAT exemption (SCI 10 March) will not apply with retroactive effect. Further, the VAT exemption will continue to apply to transactions for a grandfathering period until 1 January 2021. Issuers are continuing a .......
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GSE advancing obligations aligned
Sector developments and company hires
GSE advancing obligations aligned
Market Moves 22 April 2020
The US FHFA has aligned Fannie Mae's and Freddie Mac's policies regarding servicer obligations to advance scheduled monthly principal and interest payments for single-family mortgage loans. Once a servicer has advanced four months of missed payments on a loan, it will have no further obligation to advance scheduled payments. When a mortgage loan is in an .......
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Accessing liquidity
Christoph Gugelmann, co-founder of Tradeteq, highlights the...
Access to liquidity is becoming more important than ever; many businesses – both large and small – need support in order to maintain exporting obligations. However, even if the global economy was not currently wrestling with the impact of Covid-19, there would still be a US$1.5trn trade finance gap between what banks can loan versus what businesses need.
Talking Point 22 April 2020
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Bright spot?
European logistics gaining momentum
The logistics sector is set to be a bright spot in European commercial real estate post Covid-19. Coronavirus impacts represent one of six fundamental factors behind the sector’s momentum, according to Scope Ratings, alongside growth in e-commerce, end-customer demands, supply chain optimisation, a supply-demand/supply imbalance and new urban developments.
The agency suggests that these factors are strongly supportive .......
News 20 April 2020
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CMBS secured, unsecured sub debt weighed
Sector developments and company hires
CMBS secured, unsecured sub debt weighed
Market Moves 16 April 2020
Senior US CMBS loans with unsecured subordinate debt (such as mezzanine or preferred equity) show significantly lower default rates than senior loans with secured subordinate debt (such as B-notes) at comparable leverage points, according to Fitch. The agency evaluated the performance of 1,001 senior CMBS conduit loans with subordinate debt in place, issued between 2003 .......
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Discounted opportunities
Insurers target SRT secondary market
Insurers are now targeting the capital relief trades secondary market in search of discounted opportunities with an attractive risk profile following the coronavirus crisis. Secondary trades offer diversification and an existing track record of performance, although insurers are primarily eyeing mezzanine and senior tranches jointly with hedge funds, who will be in a position to gain junior exposure.
News 16 April 2020