Operations
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Risk limits
US corporate SRT issuance to remain constrained
Issuance of capital relief trades referencing US corporate loans is likely to remain constrained, even though a small pick-up in volume has occurred since 2020 with transactions issued by JPMorgan, Goldman Sachs and HSBC USA. Such deals are expected to be driven less by capital relief requirements and more by considerations pertaining to limit relief, profitability and balance sheet growth.
News Analysis 28 January 2022
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Remarkable restructuring
Re-tranched NPL ABS set to benefit from GACS
Intesa Sanpaolo last month completed the first restructuring of an Italian non-performing loan securitisation seeking to benefit from the GACS guarantee. Dubbed Penelope SPV, the deal also marks another first for Italian NPL transactions as, at the time of the assignment of ratings, some properties had already been acquired by the associated ReoCo.
“Penelope SPV is unusual because .......
News Analysis 25 January 2022
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How will the CLO market fare in 2022?
Vibrant Capital Partners shares how it expects CLOs to perform in 2022
Once a niche, widely misunderstood asset class, CLOs have proven resilient across credit cycles, transforming into a core allocation for institutional investors. Today, the global CLO market is over US$1trn in size and includes participation from pension plans, insurance companies, and other mostly institutional investors who have reaped the rewards of CLOs’ solid performance. In sum, the tailwinds are strong, and the .......
Talking Point 21 January 2022
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SME mission
Alain Godard, EIF chief executive, discusses Europe's post-C...
Q: What are the ways in which the EIF utilises securitisation to further its mission?
A: Central to the EIF’s mandate is, of course, our support to SMEs across Europe. There are naturally many ways or various instruments to achieve that, including securitisation.By facilitating the execution of securitisation transactions, we provide guarantees to banks and financial institutions, allowing .......
The Structured Credit Interview 19 January 2022
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Decision notice issued against BlueCrest
Sector developments and company hires
Decision notice issued against BlueCrest
The UK FCA has published a decision notice against BlueCrest Capital Management (UK) (BCMUK) setting out its decision to impose a financial penalty of £40.81m on the firm. BCMUK has elected to refer the case directly to the Upper Tribunal, which will determine the appropriate action, if any, for the FCA to take.The .......
Market Moves 24 December 2021
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MCC secures synthetic
Italian SME counter-guarantee deployed
The EIF is set to counter-guarantee a portfolio of 5,652 operations backed by the Guarantee Fund for SMEs, which is managed by Mediocredito Centrale (MCC) on behalf of the Italian Ministry of Economic Development. The total portfolio amount corresponds to €3.2bn of funding, including a direct guarantee from the Fund of €2.8bn.
Under this synthetic securitisation of secured .......
News 23 December 2021
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Double first for the EIB
EGF, first loss guarantee debuts
The EIB Group has closed the first synthetic securitisation backed by the European Guarantee Fund (EGF), an instrument set up by the EIB Group together with EU Member States to mitigate the economic consequences of the Covid pandemic (SCI 27 May 2020). The transaction is also the first whereby the EIB Group has invested in the junior tranche .......
News 22 December 2021
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Regulatory redemption?
European CLO sustainability disclosures eyed
ESG investment criteria are rapidly becoming a standard feature across the European CLO market. Enhanced ESG disclosure is anticipated to be the next step in the sector’s evolution, with more information being made available by CLO managers.
“You can see from the stats already: the sheer number of deals that include ESG investment criteria has sharply increased and .......
News Analysis 21 December 2021
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Crucial conclusions
EBE highlights importance of securitisation to the real economy
A new joint study by AFME, European DataWarehouse and True Sale International demonstrates that the private cash securitisation market is a crucial element in the funding of the real economy across Europe. Data collated in the report shows that over 80% of private cash securitisations by volume fund sellers in the UK and the EU, and over 70% to .......
News Analysis 21 December 2021
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Spanish private debt fund wins EIF backing
Sector developments and company hires
Spanish private debt fund wins EIF backing
Beka Finance has formed a private debt management unit, dubbed Beka Credit, which it hopes will help consolidate the firm’s growth and leadership position in the alternatives market. The unit is already preparing to launch its first private debt fund, with which it expects to raise around €250m.The Luxembourg-based vehicle will .......
Market Moves 17 December 2021
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Offshore appeal
International ratings for CMB credit card ABS
The first Chinese credit card ABS rated by an international agency (S&P) has closed. Zhaoyin Hezhi 2021 Phase I Personal Consumer Loan Asset-backed Securities is backed by a CNY2.97bn pool of credit card receivables originated by China Merchants Bank (CMB), which will also act as servicer on the transaction.
On why CMB sought international ratings, Andrea Lin, lead analyst and .......
News Analysis 17 December 2021
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Opportunities in interventionism?
New housing bill opens door to Spanish BTL market
Spain’s minority coalition partners recently agreed a draft housing law - the first since the country’s transition to democracy in 1975 - which could redefine the local real estate market. As the cost of housing soars, the leftwing government proposes to protect vulnerable tenants against investment funds and corporate landlord firms. The move could accelerate the emergence of a .......
News Analysis 17 December 2021
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UK review released
HMT 'broadly supportive' of securitisation market
The UK government has published its report on the review of the securitisation regulation (SCI 28 June), which outlines specific areas of the regime that HM Treasury may revisit to ensure it “best delivers” for the UK securitisation market. The report appears to be broadly supportive of the industry - although notably isn’t supportive of extending the public .......
News 14 December 2021
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Record breakers
Strong Euro CLO market set to continue
European CLO issuance volume is set to hit a post-financial crisis high of €40bn by year-end, boosted by record reset and refinancing activity. Prospects for the market in 2022 remain positive, reflecting strong leveraged debt issuance expectations, improving CLO arbitrage and a positive macroeconomic outlook.
“It’s been a very busy market – even if there has been a .......
News 10 December 2021
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Climate risk analytics firms acquired
Sector developments and company hires
Climate risk analytics firms acquired
Intercontinental Exchange has acquired risQ and Level 11 Analytics, which deploy data-driven technologies for managing climate change risk. RisQ and Level 11 Analytics leverage a variety of advanced geospatial mapping systems and provide extensive expertise in analysing and joining vast amounts of disparate public, corporate and third-party data sources.This data is integrated and .......
Market Moves 9 December 2021
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SME boost
German STS synthetic printed
Deutsche Bank and the EIB Group have executed a €75m unfunded mezzanine guarantee that references a €1bn German mid-market corporate portfolio. The guarantee will provide capital relief to Deutsche Bank and enable the lender to finance €300m of SME and mid-cap lending. The transaction is expected to support smaller businesses in their recovery from liquidity shortages caused by the .......
News 9 December 2021
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Growth constraints
Disconnect between Euro ABS ambitions and reality?
European securitisation issuance for the first 11 months of the year stood at a decade high of over €112bn, up by more than 65% compared with the same period in 2020, according to S&P figures. However, despite such record growth, a disconnect appears to remain between the industry’s ambitions and what is being seen on the ground - which .......
News Analysis 9 December 2021
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Perfect harmonisation?
Transparency and standardisation key to EU NPL initiatives
Although fears of a Covid-induced wave - or a tsunami even - of European non-performing loans (NPLs) has dissipated for now, caution and vigilance still appear to dominate the sector. A regulatory approach towards increased transparency and harmonisation of the secondary market for NPL transactions should, however, facilitate more efficiency across the sector.
“The European Commission has tried .......
News Analysis 9 December 2021
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Extendable CRE loans scrutinised
Sector developments and company hires
Extendable CRE loans scrutinised
Market Moves 8 December 2021
Fitch has published an unsolicited comment on highly extendable commercial mortgage loans that offer borrowers up to 20 years of successive annual extension options, as featured in the recent Sage AR Funding 2021 and HAUS (ELOC 39) CMBS. The agency notes that it does not treat this loan feature as credit enhancing because interest rate risk .......
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Positive prospects?
CRE tops Stage Two allocations
Commercial real estate loans were allocated the largest share of Stage Two classifications, according to the latest EBA data. This coincides with an overall growth in Stage Two allocations following the coronavirus crisis, as well as a boost in significant risk transfer transactions backed by Stage Two exposures and commercial real estate.
According to the EBA’s latest risk .......
News 8 December 2021
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Exploiting inefficiencies
Jay Huang, md and head of structured credit investments at CIFC, answers SCI's questions
Q: How has investor perception changed around CLOs, given the resiliency of the asset class in 2021?
The Structured Credit Interview 8 December 2021
A: Three years ago, when I was visiting investors, I would have to bring up the resiliency of the CLO product. However, I have noticed a trend that when I come into investor meetings now, they are bringing up the resilience of the .......