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GC Asia
Securitization - Article Archive
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The end of the road for roadshows
The shock of the Covid-19 coronavirus outbreak has forced some rapid thinking among capital markets participants. Almost the first impact has been on travel.
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New Mountain Capital prepares maiden CLO deal
New Mountain Capital is the latest manager to make a first foray into the US CLO market, readying its inaugural broadly syndicated loan deal, according to sources.
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Aircraft ABS deal shelved as virus fears push spreads wider
Coronavirus fears loomed over an otherwise benign SFVegas conference this week, with concerns over a pandemic trickling particularly into the aircraft segment. Sources say tangible cracks are beginning to show, with one deal shelved and spreads widening dramatically in the last week.
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World Bank’s pandemic bond tranche nears coronavirus wipeout
Investors looking at the World Bank’s pandemic bond are discounting the price in the expectation that its principal will be written down by the spread of the Covid-19 epidemic, writes Jasper Cox.
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BoE ‘turbo charges’ post-Libor transition with plans for index and ramped-up haircuts
The Bank of England turned up the heat on Libor this week with plans to publish a compounded Sonia index and averages in a move that will drive the transition to the new risk-free rate with a simpler coupon calculation methodology. It will also increase haircuts on Libor-linked collateral which is intended to accelerate the switch out of Libor FRNs maturing after 2021.
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Crédit Agricole to offer French Habitat RMBS to investors
Crédit Agricole is bringing a €1.156bn French RMBS from its Habitat shelf, only the third deal of the series to offer notes to investors.
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Eurobank applies for Hercules NPL programme
Eurobank has submitted applications for the senior tranches of a securitization backed by a €7.5bn loan portfolio to qualify for the Hellenic Asset Protection Scheme, known as ‘Hercules’, making it among the first to qualify for the programme if it is approved.
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China ABS: BMW will not be overtaken
BMW sold an ultra-cheap auto loan securitization in China last week, giving a clear demonstration of investor appetite for highly-rated credits despite the coronavirus epidemic. But other auto financing companies (AFCs) should be realistic about their chances of repeating this success, as liquidity is drying up quickly.
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Renovate America opens up 2020 PACE pipeline
Residential Property Assessed Clean Energy (PACE) finance company Renovate America filed an ABS 15-G this week, announcing plans to bring the first deal of 2020. Despite regulatory burdens that have resulted in lower ABS volumes, PACE providers are expecting a steady year, with another 144A deal slated to come as early as April, according to sources at SFVegas 2020 this week.
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Destination: Dublin as Dutch VAT ‘earthquake’ sends CLO managers scurrying
The CLO industry is expected to make an exodus from the Netherlands as managers with deals in the pipeline look to domicile their warehouses in Ireland. This follows a court ruling in the country, where up to a fifth of the market is located, which stings managers for a tax on management fees in a move that could shrink their income and reduce deal volumes. Tom Brown reports
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Metro launches new strategy, plans to issue more MREL
Metro Bank is looking to become a more profitable institution after launching a review of its strategy this week, but the lender still faces the challenge of having to raise a further £500m of debt to meet its capital needs.
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Bank of England lays out plans to publish compounded Sonia averages and index
The Bank of England has said it intends to publish compounded Sonia averages and a Sonia index using a ‘shift’ calculation method by the end of July, subject to feedback on a series of questions it has asked sterling market participants. This follows the first deal using that method from the European Bank for Reconstruction and Development Bank last week.
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Tech boutique offers tool to spot greenwash
Investors who have been longing for the EU Taxonomy of Sustainable Economic Activities to tell them what is green are now realising that its arrival could make life tricky. From the end of next year, they will have to start reporting how sustainable all their portfolios are. It could prove an enormous headache. But a tiny company has developed a tool it claims can cut out a lot of the worries investors face in working out how to comply.
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Barclays lands tightest 2020 CLO with second CIFC deal
Barclays has achieved the tightest cost of liabilities this year for its CIFC Euro CLO II, which saw triple-A rated notes priced 2bp inside any other European CLO issued in 2020 at 90bp over three month Euribor.
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Generali launches framework for green insurance-linked securities
Assicurazioni Generali, the Italian insurance company, has launched a framework to show how insurance-linked securities can be structured to contribute towards investments in green assets.
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Market still puzzling over Libor as sunset nears
Some in the market still do not see eye to eye on Libor transition even with the cessation of the benchmark at the end of 2021 fast approaching.
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Consumer ABS less plain vanilla as credit cycle ages
Traditional consumer ABS asset classes, particularly auto ABS, are looking less like on-the-run, flow assets than they once did, panellists said at SFVegas 2020 on Monday. As the credit cycle stretches on, speakers cautioned the audience to keep an eye on the growing risks in deep subprime consumers and the rise of revolving auto ABS structures.
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With Sanders gaining, wonks look to soothe market’s fears of a progressive president
Bernie Sanders claimed victory in the Nevada Democratic primary election to emerge as the clear party frontrunner last weekend. Financial policy experts speaking on Monday at the SFVegas conference in Las Vegas addressed a crowd nervous over the prospect of a progressive left US president unsympathetic to Wall Street.
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CLOs edge closer to digitalization after success of AMR
Digitalisation and its impact on traditional practices was front and centre at a CLOs and leveraged loan event at the SFVegas conference on Monday, where speakers were focused on the advent of digital platforms, what is possible and what is premature.
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SEC ratings watchdog floats reassessing rule 17g-5
Remarks delivered by the Securities and Exchange Commission’s director of the office of credit ratings at SFVegas on Monday hinted at the possibility that the regulator could re-evaluate the effectiveness of Rule 17g-5, a post-crisis rule intended to address conflicts in the issuer pay model.
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MUFG plans project finance, aviation CLOs
Spurred by investors’ reach for yield and the drive to more off-the-run assets, MUFG is taking advantage of its expertise in project finance and CLO structuring, preparing a rare project finance CLO and another backed by aviation assets.
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Post-Brexit law intended to clarify securitization could fragment market
An amendment to the UK Securitization law is set to come into effect at the end of 2020 when the Brexit transition period ends, clearing up confusion around the definition of sponsor in a move that could see the UK and the EU regimes diverge, said Mayor Brown in a notice released Thursday.
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Investors hope to strike oil in budding oil and gas ABS market
Oil and gas securitizations may be a win-win solution for the difficulties faced both by energy producers in search of a diversified source of funds and by investors hungry for long term, attractive returns, said speakers at SFVegas on Sunday.
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ESG proponents on the hunt for a common framework
A lack of data and a broad range of frameworks for identifying environmental, social, and governance (ESG) assets are significant hurdles standing in the way of ESG becoming a more robust asset class unto itself, said speakers at SFVegas 2020 on Sunday, urging advocates to harmonize their definitions and strategies for investing.
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Dwindling ABS yields draw thousands to SFVegas in search of new opportunities
With spreads compressed across asset classes, SFVegas 2020 promises another huge year in attendance as over 8,000 structured finance market participants scour the desert for better returns in a low yield world.
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BMW scores tightly priced auto ABS, drives through virus outbreak
BMW Automotive Finance’s Rmb8bn ($1.14bn) dual-tranche return to the Chinese auto ABS market this week was a success. The tight pricing is expected to allow other issuers to also lower their coupons, said bankers on the deal.
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Central American bank woos UK to be new member
The Central American Bank for Economic Integration is hoping to persuade the UK government to join it as a shareholder, holding out the prospect that UK companies building infrastructure in central America might be able to gain preferential funding on attractive terms now enjoyed by Korean firms.
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Golub Capital prices BSL CLO transaction
Golub Capital this week priced its first broadly syndicated loan CLO of 2020.
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Whole biz ABS riskier than oil and gas deals, Fitch says
Investors hungrily eyeing two esoteric ABS subsectors — one booming, the other nascent — may want to look take a second look, as Fitch Ratings this week warns that whole business securitizations are a riskier bet than the budding oil and gas ABS sector.
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ECB is revving the engine but the handbrake is on
Europe’s capital markets are back in super-demand mode.
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Sonia gets makeover as EBRD shifts new structure
The European Bank for Reconstruction and Development this week became the first borrower to deviate from the standardised coupon calculation method for Sonia-linked floating rates. While investors backed the new structure, with the deal receiving a huge order book from a large number of accounts, there are some market participants who believe the disruption was unnecessary, writes Burhan Khadbai.
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People moves in brief: February 20, 2020
Natixis finds new investment banking boss — UniCredit replaces Steffens with Pabarcius in UK — Lloyds puts Paterson at risk
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BofA to sell first Taurus CMBS backed entirely by Dutch assets
Bank of America is roadshowing Taurus 2020-1, a Blackstone-sponsored European CMBS and the first from the Taurus shelf to be backed entirely by Dutch properties.
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Charter Court makes quick comeback with second RMBS of 2020
Charter Court has priced its second sterling RMBS of the year with the help of arranger Lloyds and joint lead Bank of America, making a quick return to market following a deal in January.
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RentPath acquisition to hand victory to creditors
A handful of CLOs are poised to benefit from CoStar Group's acquisition of troubled apartment rental listing firm RentPath, which has agreed to be acquired out of bankruptcy for $588m.
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ABS Issuers rush to clear pipeline ahead of Vegas bash
The ABS primary market continued to push out deals at a brisk pace this week, as the heavy load rolled over from last week. Five transactions were priced through Wednesday, including unsecured consumer loan deals from LendingPoint and Pagaya.
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New name makes debut in conduit CMBS market
Commercial real estate finance firm Sabal Capital Partners came to the market this week with its first conduit CMBS transaction, a debut in a market dominated by the largest US and European banks.
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Newly launched Axa fund targets growing SRT market
Axa Investment Managers has launched its eighth investment fund focused on investments in significant risk transfer securitizations, citing a growing market as more banks enter the sector.
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Apollo subsidiary Redding Ridge prices new CLO
Apollo Global Management subsidiary Redding Ridge has priced a $501.5m CLO.
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STS is burden enough without shoehorning in ESG criteria
With the environmental, social and governance revolution well under way, attention has turned to the securitization market after recent deals pushed the issue to the top of the agenda. There has been talk of retrofitting the ‘simple, transparent and standardised’ (STS) regulatory framework with a ‘green’ or ‘ESG’ category, but regulators should think twice before conflating both themes.
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Charter Court brings ‘help-to-buy’ UK RMBS with ESG implications
Fitch and Moody’s gave a preliminary rating of triple-A to the senior notes on CMF 2020-1, a prime sterling RMBS with 29.4% of loans in the pool coming from the UK government’s Help-to-Buy scheme.
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Lloyds puts credit sales head Paterson at risk
Lloyds Bank has put credit sales head Bob Paterson at risk, a securitization specialist who had been leading sales on the bank’s risk transfer programmes.
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Catalonia law puts RMBS performance at risk
Catalonia has passed a new housing law that may have an impact on RMBS deals with a high exposure to the region.
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CLOs escape cov-lite stricture by borrowing from revolvers
Although European CLOs have a standard limit on the proportion of covenant-lite loans they buy, the definition of ‘cov-lite’ means that almost every term loan with a revolving credit facility elsewhere in the capital structure remains eligible for purchase by these vehicles.
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First senior NPL ABS of recent years tempts five new investors
The first fully public syndicated sale of senior ABS backed by Italian non-performing loans in recent years has tempted five new investors to buy into the NPL asset class. Ten buyers were allocated bonds in the landmark deal, Futura 2019.
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BMW prepares first auto loan ABS of 2020
BMW Automotive Finance is readying a Rmb8bn ($1.15bn) dual-tranche auto loan ABS transaction. The deal, to be sold on February 20, will be the first auto ABS outing in the Chinese market since the Lunar New Year.
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Vote Now: GlobalCapital US Securitization Awards 2020
GlobalCapital is pleased to present the nominees for its annual US Securitization awards, recognizing outstanding achievement in structured finance markets.
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AGL prices $600m CLO transaction
AGL Credit Management has priced a $602.6m CLO deal, the largest transaction so far in 2020.
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Hybrid subprime credit card lender preps ABS
Fair Square Financial is issuing a subprime credit card ABS backed by loans originated through a bank partnership, a feature usually seen among marketplace lenders.
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People moves in brief
HSBC hires Lahham for MENA corporate finance — Lisanti broadens markets role at Citi — Muscatt joins BMO
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Swissies on fire as banks max out
BBVA and BNP Paribas raised Swiss franc bonds on Thursday, following a week of strong issuance from a rich variety of borrowers in the market.
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Sinn Féin set to shake up Ireland’s mortgage sector
While Sinn Féin begins its attempt to form Ireland’s new government, investors and issuers are eyeing a possible overhaul of the country’s housing sector. Securitization is in the headlights, as one of the party’s key manifesto pledges, which promised to throttle the market, is on the negotiating table.
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Loans in Brief: February 13, 2020
Clearstream short term refi one of 2020's biggest European loans — Nordic Aviation Capital finds $858m fortune in US private placements — Marel finds appetite for sustainability loan — Gerald Group increases dollar revolver — Austrian loan market goes clubbing
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UK fiscal splurge cemented as ‘last Mohican’ is ousted
The ousting of Sajid Javid as the UK's chancellor of the exchequer has been interpreted in financial markets as a power grab by prime minister Boris Johnson. Javid's removal is likely to strengthen the government’s bias towards populist economics, “rewriting the Treasury’s fiscal rules”, according to one investor.
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Turkish regulator mulls reforms to unlock risk transfer market
Turkey’s Bank Regulation and Supervision Agency is mulling an overhaul to its rules on risk transfer for banks, which could open a new jurisdiction for the synthetic securitization market, and raise marginal capital for the country’s banks.
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Thiam quits Credit Suisse on fixed income high
Credit Suisse has reported a strong end to last year for fixed income sales and trading, in chief executive Tidjane Thiam’s last week in the job.
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GlobalCapital Syndicated Loan, Leveraged Finance and Private Debt Awards 2019: the full results
GlobalCapital revealed the winners of its annual Syndicated Loan and Leveraged Finance Awards at its Loan Awards Dinner at London’s Sheraton Grand Hotel on Park Lane on February 11. The Awards included GC's new Private Debt Awards. The full results are below. GlobalCapital congratulates all the winners and nominees.
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Pass-thrus, investor deals to boost online loan ABS
Issuance of ABS backed by marketplace loans is expected to get a boost this year, supported by a higher volume of pass-through certificates and investor-sponsored deals, according to Kroll Bond Rating Agency.
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Skipton returns to RMBS after four year break
Skipton Building Society is bringing a prime sterling RMBS with joint arrangers JP Morgan and Lloyds. The issuer last brought a deal in 2016, pausing the programme in light of the UK government’s Term Funding Scheme (TFS).
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No return seen in euro CLOs for Norinchukin
Even after the Japanese financial year-end at the end of March, Norinchukin Bank is unlikely to return to the European market as an anchor investor in senior CLO tranches, according to a CLO manager with knowledge of the bank’s approach.
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Hoist shores up capital with AT1 offer
Hoist Finance is marketing an additional tier one, part of the debt purchaser’s journey back to capital health following a regulatory judgement that wiped 3.7 percentage points off its core equity tier one ratio. The deal follows a landmark non-performing loan securitization called Marathon, which saw CarVal Investors take risk off the Swedish firm’s balance sheet.
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Marble Point prices latest CLO transaction
Connecticut-based CLO manager Marble Point Credit Management has priced a $408m deal via Morgan Stanley.
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Hewlett Packard returns with IT equipment ABS
Hewlett Packard Enterprise is readying its second securitization backed by loans and leases secured by IT equipment. Boosted by scarcity value, sources expect the small ticket equipment to offer better value than all other equipment asset classes this year.
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Sustainability: more stick, less carrot
Sustainable finance players are enthusiastic about regulation, which they expect to bring clarity and order to the market. It may — though when the new EU rules are implemented they are likely to irk participants more than they expect. But what would be really effective are direct actions that bypass finance.
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Goldman preps CMBS to finance Thai conglomerate’s UK hotel buy
Goldman Sachs has announced a deal called Magenta CMBS to finance Thai conglomerate DTGO Corporation’s purchase of 17 regional hotels across the UK from Marathon Asset Management. The deal is the first CMBS linked to Sonia, with the commercial real estate market proving slower than consumer assets classes to switch from Libor.
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Incapital adds four in fixed income with eye on MBS
Fixed income brokerage firm Incapital has added four industry veterans to its distribution platform, aiming to expand into asset classes that offer clients higher returns in a low yield market. The team is particularly reinforcing its RMBS and CMBS coverage.
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Pandemic bond slips as coronavirus spreads
The value of the riskier tranche of the World Bank’s pandemic bond has been discounted — but not by very much — as the coronavirus outbreak infects more people outside of China and therefore comes closer to triggering a payout from the notes.
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Standard Chartered plans to boost CLO trading operation
Standard Chartered is looking to build out its CLO trading capabilities in EMEA, and is in the market for a CLO trader, part of the bank’s broader push into European securitized products.
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Consolidation beginning in private debt as clouds gather
Reports from Pitchbook and Preqin have found an increased concentration of capital in private debt funds. This is giving larger asset managers a whip hand in dealmaking, while smaller funds struggle to raise and deploy capital, and investors seek the safety of big players ahead of an expected downturn.
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Santander scores solution for costly undrawn revolver exposures
Santander has bought credit protection on two portfolios of undrawn revolving credit facilities, taking advantage of a regulatory decision last year to sharply boost the efficiency of the protection. The deal points the way for banks to cut the costs of providing revolvers, which are usually extended as a ‘loss leader’ for a broader banking relationship.
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CLOs and lev loans at the center of 2020 Fed stress tests
The Federal Reserve announced plans to stress test bank holdings of leveraged loans and CLOs during a hypothetical recession in its annual evaluation of the health of the 34 largest US banks.
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Sunnova prices first solar securitization of 2020
Solar finance company Sunnova priced the first solar securitization of 2020, a $313.5m dual tranche offering, on Wednesday.
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Investors see point of sale as next frontier for marketplace loan ABS
Marketplace loan ABS investors are looking at point of sale lending as a potential growth area, as more consumers opt for financing at the checkout counter to avoid boosting credit card balances.
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First Eagle raises $782m for middle market direct lending
First Eagle Alternative Credit on Thursday announced that it has raised a $782m middle market direct lending fund, its fourth such investment vehicle to date.
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People moves in brief: February 7, 2020
HSBC picks regional bosses ahead of expected restructuring — Mizho goes on fixed income hiring spree — Bank of America appoints head of rates trading
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EBA plans to clear up risk transfer tests
The European Banking Authority will be consulting on its approach to risk transfer by the end of the second quarter, with the treatment of excess spread likely to be a crucial topic for issuers and investors in the securitization market.
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UK issuers make strategic return to dollar covered bonds
144A dollar covered bonds issued this week by Santander UK and Nationwide Building Society signal that UK banks have made a strategic return to the asset class after an absence of about 10 years. Their return, which is driven by the need to refinance liquidity borrowed under the Bank of England's Term Funding Scheme, should improve price discovery for dollar denominated securitizations.
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Apollo rolls four CLOs into single massive refi
Apollo Credit Management priced a $2.14bn CLO on Wednesday, pulling together four older transactions and rolling them into a single refinancing.
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Aircraft ABS investors demand more spread as virus fears grow
Investors are looking for more yield on aircraft ABS paper as fear over the coronavirus intensifies globally. With Asia taking up a bigger share of global air travel than during the SARS outbreak in 2003, investors expect the coronavirus to have a bigger impact on the market.
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Storming sterling securitization run continues
The strong conditions in the sterling denominated securitization markets continued this week, with Close Brothers’ Orbita 2020-1 auto ABS priced on Tuesday and Cerberus’s Towd Point Mortgage Funding 2020-Auburn 14 on Wednesday. Both deals saw large oversubscription levels on the relatively limited volume of bonds available, following the precedent set by the RMBS deals that were priced in January.
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Fitch shuffles RMBS, CLO ratings heads
Fitch Ratings on Wednesday announced that it has appointed veterans Kevin Kendra and Derek Miller as head of US RMBS and head of US structured credit, respectively.
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Sound Point cements rapid euro rise with third deal
Sound Point Capital has rapidly expanded its euro CLO platform with a third deal in less than 10 months, speeding ahead of last year’s other market debutants — most of which are yet to print a second deal in euros. The credit manager has access to equity investment through a deal with Canada’s CPPIB pension fund, which may have helped its swift growth.
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Levfin leaves qualms about coronavirus to IG wimps
Carnage in Chinese stock markets apparently has little read-across to European speculative grade credit. Leveraged loan and high yield markets are still wide open, meaning issuers that can refinance are well advised to do so.
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LSTA seeks to shed light on ESG in lev loans
The Loan Syndication and Trading Association this week released a questionnaire for leveraged loan borrowers on their environmental, social and governance policies, seeking to give loan investors more insight into the importance of ESG practices among corporate borrowers.
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ABS research veteran McElravey departs Wells Fargo
Consumer ABS research analyst John McElravey has left Wells Fargo after 13 years with the bank, according to a company spokesperson. McElravey most recently served as the managing director and the head of consumer ABS research.
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Man GLG scores tighter, shorter triple-A
Man GLG Euro CLO VI on Monday printed triple-A notes at 90bp, a new senior tranche tight for 2020 — but with a shorter reinvestment period than its peers. The deal was at first slated for last year, with the original warehouse set to expire in December, but the manager pushed into 2020 and benefited from a broad market rally — and from splitting the equity tranche.
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Lloyds preps second Syon risk transfer securitization
Lloyds is working on another risk transfer deal referencing its high loan-to-value mortgage portfolio, following last year’s debut Syon Securities 2019 issue. Mortgage risk transfer deals are almost unheard of outside the US, thanks to the low risk weights usually applied to performing mortgages, making last year’s Lloyds debut a landmark in synthetic securitization.
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Futura notes a rare chance to buy Italian NPL seniors
Barclays and JP Morgan were this week marketing the senior notes of Futura 2019 for Guber Banca and Varde at mid-300bps over six month Euribor. The deal gives investors a rare chance to buy publicly syndicated investment grade exposure to Italian non-performing loans.
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Mizuho makes swathe of fixed income hires
Mizuho International has hired nine bankers for roles across emerging markets trading and sales, rates, options, securitised products and credit sales and trading. Among the hires, the bank has found a new head of MTNs and appointed a senior emerging markets trader from BNP Paribas.
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Sound Point woos Deutsche CLO primary head
Francis McCullough, former managing director and global head of new issue CLOs at Deutsche Bank, has joined Sound Point Capital Management as the firm's global head of CLO capital markets and structuring.
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Sallie Mae readies new private student loan securitization
Sallie Mae is preparing to sell a private student loan ABS deal, shortly after it announced plans to sell a portfolio of private student loans to fund a share buyback program.
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Morgan Stanley preps direct lending securitization
Morgan Stanley is arranging a trade receivables ABS for Gedesco, a Spanish non-bank SME factoring company, in what will be a rare publicly syndicated term offering in the asset class. Most of the deal, however, is backed by direct lending to Spanish mid-cap firms.
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Link buys Pepper’s European servicing business, targets Greece and Spain expansion
Link Group said it has agreed a €165m deal to acquire Pepper Group’s European loan servicing, asset management and advisory business, which will create a servicing group managing €130bn in assets.
