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GC Asia
Securitization - Article Archive
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GSO and Napier Park find new tights for post-Covid CLOs
GSO/Blackstone and Napier Park both priced post-covid CLOs on Thursday, with GSO finding new tights for the European CLO market since its reopening.
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Middle market specialist hires Oaktree executve
Owl Rock Capital, an alternative asset manager focused on middle market credit, has hired Jesse Huff from Oaktree Capital Management.
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ABS investors weigh options in Hertz bankruptcy
ABS investors watched nervously last week as car rental company Hertz filed for bankruptcy, with few good options to keep cash flowing in the face of a crisis that has curtailed travel and depressed used car values. However, sources say that there are a number of reasons investors should be pinning their hopes on a reorganization rather than a liquidation.
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Soaring CMBS delinquencies a preview of pain ahead
Loans packaged into US commercial mortgage-backed securities (CMBS) delinquent by 30 days or more have quadrupled, according to remittance reports published in May, as the economic devastation of the coronavirus pandemic ripples through the financial system. Market participants fear record levels of distress if borrowers that are now in their grace periods add to the figures in the coming month, writes Max Adams.
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Second mortgage holiday not in customers' best interests, says finance lobby group
Finance lobby group UK Finance said that most borrowers on mortgage moratoriums could afford to resume full payments after three months, and an extended moratorium would not be in customers' best interests.
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China’s ABS market ready for change
China’s auto ABS market has seen a slew of tightly priced deals this month, thanks to ample liquidity onshore and the growing strength of domestic investors. While very short-term trades have been popular, appetite is rising for longer revolving structures, said bankers.
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Threat of CLO downgrades poses challenge for insurers
The possibility of CLO downgrades from the major rating agencies is creating a difficult situation for insurance companies, many of which have bulked up their investments in lower rated bonds in the last two years.
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Loanpal preps first solar ABS since outbreak
Loanpal is bringing the first solar securitization to market since the Covid-19 outbreak. The deal is the first of several solar ABS lining up for the coming weeks, sources said, with at least two other 144A deals in the works.
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Investcorp debt boss eyes post-pandemic CLO 3.0 era
CLOs structured in the post-pandemic world will see tighter documentation, but more flexibility on ratings, as the market adapts to the lessons learned through the Covid-19 crisis and ushers in a new ‘CLO 3.0’ era for the European market, according to Investcorp Credit Management boss Jeremy Ghose.
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Alantra opens offices in China and Brazil, hires new advisory team
Alantra is buffing its credit portfolio advisory team with the addition of Marcus Evans and Christos Stefanidis, who will join as managing directors in the UK and Greece. The credit portfolio advisory firm is also opening up offices in Latin America and China.
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Crisis Talk — with Daniela Mardarovici, co-head of multisector fixed income at Macquarie IM
GlobalCapital spoke to veteran portfolio manager Daniela Mardarovici, who co-heads the multisector and core plus fixed income business at $234bn asset manager Macquarie Investment Management, about the US Federal Reserve's rescue packages, the magic of Boeing's market access, and where to find the bargains in energy, emerging markets and healthcare.
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Toyota gets tight pricing on auto ABS return
Toyota Motor Finance (China) sealed a Rmb4.5bn ($629m) dual-tranche auto securitization deal on Wednesday. Its return to the onshore market was the latest in a series of tightly priced auto ABS outings.
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High earners draw investors to student loan refi ABS
The pandemic has taken its toll on consumer ABS asset classes since March, but sources this week say that they are seeing opportunities in discounted bonds backed by refinanced student loans issued by top tier fintech lenders.
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FCA moratorium guidance to lessen RMBS protections
The UK’s Financial Conduct Authority (FCA) has encouraged banks not to record mortgage loans with payment moratoriums as being in default, delaying default related triggers designed to protect noteholders and causing concerns around RMBS deal performance.
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Cairn Capital snags risk transfer specialist from Bank of Montreal
Cairn Capital has hired Bank of Montreal's Charis Edwards as junior portfolio manager for risk transfer.
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Bankruptcies compound stress for embattled US CLO market
A gathering storm of bankruptcies among US retailers rolling in behind a swelling wave of loan defaults is bringing distress to the US CLO market, forcing both managers and investors to adjust their approach, writes Paola Aurisicchio.
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Lenders old and new scramble for 'digital first' in era of Covid-19
The capital markets have been working to transition operations to a digital format for years, but bank incumbents have been reluctant to make a wholesale shift, largely because there was no urgent need to do so. Coronavirus has changed that, and banks are accelerating plans to update legacy systems, muscling in on territory once held firmly by fintechs.
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Crisis Talk — with Dan Zwirn of Arena Investors
In the special situations arena there are few situations quite as special as a global pandemic, and few opportunities quite as large for investment firms that manage to navigate the sell-off in corporate credit, bank loans, CLOs and securitizations correctly. GlobalCapital spoke to Dan Zwirn, founder, CEO and CIO of Arena Investors, and a 25 year veteran of distressed debt and special situations investing about buying free volatility, where to play in retail, and why the CLO market has much further to fall.
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Mortgage moratorium self-certification hiding UK RMBS performance data
The UK chancellor has doubled the mortgage moratorium period to six months, but has not allowed mortgage lenders more discretion when deciding to grant payment holidays on their mortgages. This is making RMBS performance difficult to assess, market participants say.
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Credit funds said to see opportunity in UK SME loan scheme
Credit hedge funds are looking to finance books of SME loans originated under the UK government’s Coronavirus Business Interruption Loan Scheme (CBILS), subscribing for the equity in private securitization vehicles backed by the loans. The government guarantees are likely to improve the financing terms on offer, boosting returns for funds that can access these assets — but there are still questions over the details of the scheme.
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CMBS issuance flows but pre-pandemic loans worry investors
CMBS issuers have come back to market in recent weeks, bringing deals structured to entice investors with features meant to withstand the shocks of the pandemic. But investors say that there are still concerns around adding exposure to commercial mortgages written before the crisis.
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BWIC volume highest since 2016 YTD
European securitization bids wanted in competition (BWIC) volume has already reached €4.6bn in 2020, the highest level since JP Morgan's research team began collecting BWIC data in 2016. The secondary market is rallying following an improved equity market and a reopened European primary.
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CNH prices equipment ABS, sees toughest period ahead
CNH Capital priced its first securitization of the year on Tuesday, one of the few equipment ABS sponsors to come to market during the Covid-19 outbreak. The company is forecasting the “most severe impact” in the second quarter, with some regions and product lines seeing a 40% decline in demand, CNH said.
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Mercedes prices Silver Arrow 11 in line with BMW market opener
Mercedes-Benz priced its Silver Arrow Compartment 11 ABS auto deal at 40bp for the senior notes, in line with a deal from BMW which reopened the European ABS market last week.
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EIB turns to securitization for green finance, SME relief
The European Investment Bank (EIB) has invested in a Portuguese RMBS collateralised by green assets as part of a wider ESG programme. The group has also revealed details of its significant risk transfer (SRT) programme designed to support SME loans during the lockdowns.
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Foreign banks throw weight behind Toyota’s Rmb4.5bn auto ABS
Toyota Motor Finance (China) Co is set to price a Rmb4.5bn ($633m) auto loan ABS next week, bringing to the market only its second deal in two and a half years. The 11-member underwriting group has eight foreign banks.
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BoE explores further measures to expand Covid support
The Bank of England is mulling ways to support businesses left out of Covid-19 support schemes, with a focus on sub-investment grade corporates and encouraging lending into the real economy. A securitization structure is being comtemplated via the setting up of an intermediary bank.
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US CLO triple-As touch tightest levels since March
Spreads on triple-A CLO paper hit their tightest levels since the pandemic began with a deal priced last Friday, as investors report renewed confidence in the highest rated portions of the CLO capital stack.
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TALF benefits for ABS have mostly run out, investors say
The Federal Reserve’s Term Asset Backed Securities Loan Facility succeeded in boosting investor confidence and providing a backstop to further spread widening, but sources say that key limitations in the scope of the programme, even with the most recent expansion last week, mean that the benefits have mostly already been felt.
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Pimco leans on pre-sounding for latest Irish RMBS offer
Levels on offer in the public securitization markets didn’t hit Pimco’s targets for class B notes in its new Irish RMBS, Fingal Securities, while placement of the class 'A' notes lent heavily on a group of pre-sounded accounts to derisk the deal's execution.
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Geely jumps on the bandwagon for tightly priced ABS
Genius Auto Finance sealed a Rmb4bn ($563m) three tranche auto loan ABS on Thursday, piercing through a razor-thin 2% coupon level for the senior tranches.
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TALF revisions to clear warehouses but lack of broader CLO support disappoints
The Federal Reserve this week revised its Term Asset Backed Securities Loan Facility (TALF) to include a broader pool of leveraged loans eligible as collateral, a move that will clear the backup in warehouses but likely will not do much to reinvigorate the market.
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Covid economy boosts outlook for subprime auto market
The demand for cars is on the rise as the near term outlook for an economic reopening remains uncertain. Even long after the pandemic subsides, market players say consumers will rely heavily on delivery services and avoid public transportation, making subprime auto bonds an attractive buy.
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BMW clears euro primary pipeline as Mercedes roars in
The European auto ABS market raced back to life on Thursday with BMW pricing the senior notes of its Bavarian Sky 10 deal on the same day as Mercedes-Benz announced its return to the market with Silver Arrow 11.
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Servicer walk-out clauses left out of Covid-era ABS docs
New ABS contracts are being written to exclude pandemics from the scope of ‘force majeure’ clauses, inserted to allow servicers to step away from their commitments if events outside of their control – such as the outbreak of Covid-19 – stop them from servicing portfolios.
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Citigroup bond syndicate leader to leave industry
One of Europe’s leading bond syndicate bankers has decided to leave Citigroup, and probably the capital markets.
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Gulf Stream, AIG price short duration CLOs
CLOs with shorter reinvestment periods continue to dominate the primary market in the US, as managers shift to actively managed deals rather than static transactions that reopened the market in April.
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Vivint drops ABS offering "on the cusp of closing"
Vivint Solar pivoted away from a solar securitization that was "on the cusp of closing" before the onset of the Covid-19 pandemic, in favor of an alternative financing structure that it hopes to close in the second quarter.
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Nassau hires CLO portfolio manager
Nassau Private Credit, the CLO arm of Nassau Financial Group, announced that it has hired Vincent Chan as portfolio manager to focus on CLO investments.
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BMW gives guidance on first post-Covid euro auto ABS
BMW Bank has released initial price thoughts for its latest car loan securitization, set to test the primary ABS market, which has been dormant for nearly two months.
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Crisis Talk — with Christophe Salmon, CFO of Trafigura, on hedging oil’s biggest crash
As a crucial middleman in the oil business, Trafigura has had to cope with concerns about the creditworthiness of some of its counterparts, and unprecedented volatility in the oil price that saw the West Texas Intermediate (WTI) contract turn negative at the end of April. Christophe Salmon, the company’s chief financial officer, explained how the company has coped with the crisis, and how its funding approach, based on deep banking relationships and a secured financing structure, proved resilient to the chaos around it.
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GAC-Sofinco scores record low pricing for ABS outing
GAC-Sofinco Auto Finance priced a Rmb4bn ($564m) four-tranche auto loan ABS offering on Tuesday. The senior class A1 and A2 tranches were both sealed at coupons below 2%, setting a new record for Chinese auto ABS issuers.
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Fed announces further TALF, PPP details
The Federal Reserve on Tuesday announced new details for its Term Asset Backed Lending Facility (TALF) and Paycheck Protection Program (PPP) and is planning monthly updates for the duration of each program to identify borrowers, amounts borrowed and interest charged for loans backed by eligible ABS assets.
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Investors see opportunities in subprime auto bonds
The market is split on its outlook for subprime auto ABS, but while conservative investors are staying away there is growing optimism among others who believe credit enhancements and prospects for a strong economic recovery make the asset class an attractive buy in the time of coronavirus.
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Barclays brings first post-Covid RMBS
Barclays is leading the race to reopen the European RMBS market with an €807m Irish deal, Fingal Securities, a piece of the 'Project Porto' portfolio it bought from Bank of Scotland in 2018, with joint leads BNP Paribas and Bank of America joining sole arranger Barclays to help price the deal.
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Hertz to test bankruptcy remoteness of ABS in new crisis
Hertz’s flirtation with bankruptcy has sparked a debate in the asset-backed securities market over the fate of the company’s rental car ABS trusts. But if Hertz succumbs to the economic ravages of the coronavirus pandemic, various safeguards in its ABS documentation should result in minimal damage to bondholders, reiterating a key strength of securitization in times of crisis.
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Fair Oaks introduces delayed draw into euro CLO
Fair Oaks Capital is bringing its second euro CLO to market via JP Morgan, only the fifth deal issued since the Covid-19-induced lockdowns, bringing with it a delayed draw double-B tranche — an option to let the equity boost deal leverage once market conditions improve.
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UCI doubles Europe's green securitization universe
Portuguese mortgage lender UCI doubled the universe of European green securitization issuers when it privately placed its RMBS Green Belém No 1, a deal backed by Portuguese mortgages, at the end of April. The deal had originally been slated for public debut before the coronavirus crisis hit, but was pre-placed in private following March’s market chaos.
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Libor transition deadline ‘challenging’ but unlikely to be extended, says senior lawyer
The coronavirus crisis has severely disrupted the move away from Libor to the new recommended risk-free rates. But market participants will have to press on to meet the original deadline, with no extension on the horizon, according to a senior capital markets lawyer.
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Over 20% of CLOs failing key test, analysts say
The percentage of triple-C rated loans held in CLOs has tripled to 12% in the past three months, leading 21% of outstanding deals to fail at least one overcollateralisation test, according to Bank of America.
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Kroll upgrades CPS subprime auto bonds
Kroll Bond Rating Agency has upgraded three classes of notes in three CPS subprime auto ABS deals, highlighting increased level of credit enhancements. Despite a lack of obvious red flags in the sector, even as the pandemic persists, sources warn that highly levered subprime auto sponsors still face a rocky road ahead as used car values plummet.
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Crisis Talk — with Sairah Burki, managing director, regulatory policy at CREFC
The fallout from the Covid-19 crisis has touched nearly every economic and employment sector, from the largest corporations to the smallest businesses. The pain has prompted an unprecedented policy response aimed at rescuing economies and markets, and further measures are likely to come. US commercial real estate has been especially impacted, with commercial mortgage lending slowing dramatically, already struggling retailers going dark across the country and a likely rethinking of the use of space following a nationwide experiment in working from home.
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BMW to reopen euro ABS market with auto deal
BMW Bank is set to reopen the European securitization market after the covid-19 lockdowns with its latest German auto loans deal.
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Funding Circle MD leaves for PayPal
Bernardo Martinez, managing director of Funding Circle US, is moving back to PayPal to serve as the vice president of global business financing solutions.
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Geely JV mulls second China ABS outing of the year
Genius Auto Finance, a joint venture between Geely Automobile and BNP Paribas Personal Finance, is planning to kick off a Rmb4bn ($565m) auto loan ABS deal on Thursday.
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Partners prices $300m 'print and sprint' CLO
The US CLO arm of Swiss private equity firm Partners Group navigated the volatility in leveraged loans this week to price a $301m “print and sprint” CLO.
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MUFG hires pair of levfin bankers in New York
MUFG announced on Friday that is has hired Marc Lavine and Diane Wright as directors in the Japanese bank's leveraged finance sales group in New York.
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Cell tower ABS shines among esoterics in Covid era
The pandemic has led to a bifurcation among some esoteric ABS subsectors, with more resilient assets like cell tower ABS seeing continued deal flow while others continue to be shut out of the market.
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EBA proposes framework for STS synthetic securitizations
The European Banking Authority (EBA) has published its proposals for developing a 'simple, transparent and standardised' (STS) framework for synthetic securitization, endorsing better capital treatment and permitting the use of some excess spread for credit enhancement — a boost for the market if the package is approved by the European Commission.
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Villain of the last crisis, hero of this one
Europe’s SMEs are in trouble. The coronavirus pandemic has zeroed revenues and threatens their very existence. They last faced a big threat in the 2008 crisis when bank lending dried up and a recession took hold. Back then, securitization took a lot of the blame as the cause, but this time it offers a route to rescue.
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LendingClub originations to fall by 90% in second quarter
LendingClub announced that it is anticipating lending volumes to decline by 90% in the second quarter, as the online lender tightens its underwriting criteria in response to a sudden drop in investor interest and mounting unemployment numbers, the company said in an earnings call.
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New wave of negative actions hit junior CLO notes in May
May opened up with another round of negative ratings actions for CLOs, with junior tranches coming under pressure as the number of leveraged loan downgrades climbs.
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Goldman conduit sees high demand, LA office next on tap
A conduit CMBS deal from Goldman Sachs in the market this week is drawing strong demand from investors eager to buy the first new commercial mortgage bonds in nearly two months, while Morgan Stanley is looking to draw buyers for a Los Angeles office CMBS with some unique protections.
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Fitch takes action on two START aircraft securitizations
Fitch Ratings announced actions on two GE Capital Aviation Services (GECAS) serviced aircraft deals due to ongoing deterioration of lessees. Investors say the role of the servicer is of heightened importance in the time of Covid-19, as deteriorating economic conditions warrant for a more proactive management of aircraft portfolios.
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Crisis Talk — with virology expert professor Peter Openshaw on why post-Covid offices must adapt
As Western societies begin to contemplate life returning to some semblance of normality, the financial industry is working out how best to balance the understandable desire to get back to how things were before the crisis with the very real threat of a new and more deadly wave of coronavirus brought on by a mass-return to offices. GlobalCapital’s Silas Brown spoke with Peter Openshaw, a specialist in immunology and virology and professor of experimental medicine at Imperial College, about the transmission of Covid-19 and how banks, investors and companies can reduce the risk of infection.
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VW offers cash boost to residual value buffer in ABS shelf
Volkswagen Financial Services has said it will inject cash into its ABS transactions where borrowers have been granted payment holidays, aiming to top up the deals to protect investors from the decline in likely residual values.
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Swedish pension giant joins risk transfer market
Alecta, a Swedish pension fund manager, has announced it will be working alongside Dutch healthcare pension fund PGGM in the risk transfer market, taking 30% of deals PGGM invests in.
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GAC-Sofinco readies four-tranche auto ABS
GAC-Sofinco Auto Finance is returning to China's auto ABS market next Tuesday with a Rmb4bn ($564m) four-tranche offering. The automaker is set to take advantage of falling bond yields onshore to score tight pricing.
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Rental car ABS trading soars as Hertz fights bankruptcy
ABS trading activity jumped significantly for rental car bonds issued by Hertz following news last week that the company was preparing for potential bankruptcy. Sources say they are being forced to reconsider the underlying valuation of the collateral as Covid-19 continues to weigh on the rental car ABS sector.
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Guggenheim prices fourth Covid-era euro CLO
Guggenheim Partners has priced a €281.65m European CLO, Bilbao CLO III, the fourth manager to come to market since the Covid-19 crisis began.
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Goldman restarts CMBS with deal tailored to weather pandemic risks
Ratings issued on Monday for a conduit CMBS deal from Goldman Sachs show that the bank is preparing to re-enter the market, bringing a $771.8m deal built to withstand some of the risks posed to commercial real estate by the coronavirus pandemic.
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Carlyle defers some CLO fees after tough first quarter
Downgrades of leveraged loans in the first quarter led to Carlyle Group deferring $4m of subordinated CLO management fees, executives at the firm stated in a first quarter earnings call.
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EIF takes on Romanian SME risk with SRT deal
The European Investment Fund (EIF) has executed a significant risk transfer securitization to shift risk from Romanian small and medium-sized enterprises, taking exposure away from the balance sheets of nine Romanian banks as part of the EU’s SME support programmes.
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Fed expands lending program to extend aid to more businesses
The Federal Reserve revised the eligibility for the Main Street lending facility, a program aimed to help small and medium-sized businesses through low interest loans. A key change opens the program to more participants, including companies with higher leverage.
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US Bank hires head of CLO research in Chicago
US Bank has hired Sean Kelley as head of CLO data analytics and research, based in Chicago.
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Chenavari’s Toro fund unwinds loan warehouse
Chenavari Investment Management’s Toro Fund said in a recent update to investors that it was unwinding its leveraged loan warehouse, in contrast to other CLO fund managers and equity investors that have pushed out deals and begun to reopen the market.
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Synlab seeks maturity extension after 500k Covid tests
Synlab, a medical testing firm owned by Cinven, is looking to push out its debt profile, amending and exchanging bonds and loans due 2022 to a loan with a 2024 maturity. It is the first flicker of life in the European primary leveraged loan market since the coronavirus crisis hit.
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Norwegian Air Shuttle nears state support as rescue package given go-ahead
Norwegian Air Shuttle is close to receiving vital loan guarantees from Norway, as shareholders voted through a near $1bn-equivalent debt to equity swap from bondholders and aircraft lessors.
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Crisis Talk — with Jeff Ruben, president of WSFS Mortgage, on pandemic pressure in US home loans
The coronavirus pandemic has led to widespread consumer and household balance sheet pressure. With lay-offs and furloughs cascading across industries, there is the likelihood many will be unable to meet basic needs while the economy remains shut down, and servicing debt becomes less feasible the longer the crisis goes on.
