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GC Asia
Securitization - Article Archive
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Owl Rock priced a rare tech-focused CLO
Owl Rock Capital Partners priced a rare tech-focused middle-market CLO primarily backed by loans to companies in software, media and services, and health care technology.
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Hertz returns with $4bn ABS to climb out of bankruptcy
Hertz is returning to the ABS market for the first time since it filed for bankruptcy in March. The rental car company is revving up for a $4bn delayed draw securitization, a stepping stone towards longer-term ABS deals it hopes to issue next year, sources said.
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Full stack sales block payment holiday fixes
Securitization originators who sell their full capital structures hoping to deconsolidate assets could struggle to protect their deals from Covid-19 payment holidays, as targeted repurchases or liquidity support risks regulators treating deals as though they are still on balance sheet.
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Fletcher joins Investec power and infra group
Felix Fletcher has joined Investec’s power and infrastructure finance team as a senior coverage banker, originating for lending and advisory business across the group.
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Basel Committee takes edge off toughest part of NPL proposals
The Basel Committee has backed down from tough new changes which could have raised the costs of financing non-performing loan portfolios, allowing banks to use external ratings to assess the risk of NPL securitizations.
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Arb ‘works again’ for euro CLOs after knockout CVC pricing
Arranger Barclays priced its €378.7m CVC Cordatus Loan Fund XIX at 106bp on Wednesday, the tightest senior spread since March, making the arbitrage between assets and liabilities attractive again for equity investors.
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Auto trio target different buyers amid supply rush
Ford Automotive Finance (China), Dongfeng Nissan Auto Finance Co and domestic Chinese originator BYD Auto Finance Co competed head-to-head in the onshore auto loan asset backed securities market this week, but a strategy of targeting different investors helped bankers manage the competing supply, Addison Gong reports.
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CCB sells onshore RMBS with two international ratings
China Construction Bank priced a Rmb8.4bn Jianyuan 2020-12 residential mortgage-backed securities (RMBS) this week, attaching two international ratings to an all-floating rate deal.
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Fitch appoints Paladino as North America head of structured finance
Fitch Ratings appointed Michael Paladino as the new head of structured finance for North America, its latest update from a global reshuffle.
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EBA gives hope to SRT market
The European Banking Authority has lifted the spirits of those working in the significant risk transfer (SRT) market by suggesting that call options and early termination rights should not disqualify a transaction from achieving SRT recognition, pushing back on proposals made by European Parliament members.
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Greene King securitization faces default as bondholders face a choice
Greene King’s pub securitization Spirit Issuer is expected to default this year, after bondholders declined to waive potential covenant breaches in the same way they did for other pubcos, including the company’s larger, whole business securitization. This will give bondholders the right to enforce security, but it will test creditors’ desire to take over the assets outright.
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Ford, Dongfeng Nissan compete with auto ABS deals
Ford Automotive Finance (China) and Dongfeng Nissan Auto Finance Co both returned to the onshore auto loan asset backed securities market this week, enticing investors with similar yields.
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Now is not the time to rush an ESG securitization framework
An ESG framework for the European securitization market is a noble aim but the middle of this pandemic is not the time to implement it. The European Parliament needs to take its time and make sure such a regime is built to last, and not throw it in alongside emergency legislation.
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Student loan relief leaves market worried
Student loan forgiveness has been one of the main pillars of US president-elect Joe Biden’s election campaign, worrying student loan securitization specialists in the sector since early this year. With Democrat Biden’s inauguration around the corner, market participants are scrambling to prepare for new regulations that could impact their student loan ABS investments.
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CBAM, AGL return to five year reinvestment
CBAM priced a $329M CLO on Tuesday, joining a handful of managers that are gradually pushing out reinvestment periods back to the pre-Covid five year standard.
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FCA rolls out STS deal list ahead of Brexit
The UK’s Financial Conduct Authority has launched a new platform dedicated to listing all securitizations which qualify as ‘simple, transparent and standardised’, preparing the UK securitization market for the end of the Brexit transition period.
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Tepid CLO market rallies on vaccine news
A wider market rally boosted by positive vaccine news from Pfizer, Moderna and the University of Oxford has begun feeding into the European CLO market, tightening secondary spreads while primary markets remain more sluggish.
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Record low rates to boost RMBS issuance in 2021
The RMBS market is expected to see more issuance in 2021, boosted by all-time lows in mortgage rates and a faster dealmaking process enabled by technology borne out of the pandemic.
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Ares prices the tightest CLO of Covid-19 era
A flurry of primary CLO deals in the BSL and middle-market opened up post-election supply in the US last week, with Ares Management achieving the tightest spread on triple-A rated paper since the pandemic and Pimco returning as issuer after a 13 year absence.
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First euro CLO switches to semi-annual
Penta CLO 2 has become the first CLO to switch its coupon payment from three month Euribor to six month Euribor, according to Fitch Ratings on Monday, following the flood of underlying loan borrowers choosing to push payments onto the longer timeline.
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Schroders targets pandemic opportunity
Schroders has closed a new private credit fund, which will use a mix of securitized bonds, warehouse lines, direct loans and other instruments to target dislocated opportunities as the impact of the Covid-19 pandemic plays out in credit markets.
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Goldman changes UK IB and ECM leadership
Goldman Sachs has appointed new heads of its UK investment banking and EMEA equity capital markets businesses.
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Mercedes-Benz auto ABS sees spreads retrace
Mercedes-Benz priced Silver Arrow 12 on Thursday at one of the tightest auto ABS prints of the year, putting spread levels back in line with September prices, with the help of arranger Crédit Agricole.
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CLO investors shift as banks make way for smaller buyers
The Covid-19 pandemic has reshuffled the CLO investor base, with big bank buyers cutting their exposures, and insurers and mutuals gaining shares. Smaller pension funds and high net worth individuals have also entered the sector, tempted by the surprisingly strong performance of the asset class through the crisis period.
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Market pushes back on ‘rushed’ ESG criteria for securitization
The securitization market is pushing back against proposals in the European Parliament to tack a green framework for ABS deals onto existing discussions about NPL and synthetic securitizations that were supposed to be rapid-fire amendments to help the market fight off Covid-induced economic woes. Tom Brown reports.
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Calabria pushes pedal on GSE reform before Biden takes office
The Federal Housing Finance Agency (FHFA) issued its final capital rule on Wednesday, mandating more capital for Fannie Mae and Freddie Mac to ensure they exit conservatorship on a ‘sound capital footing’. The agency’s progress towards privatisation could be limited by the likelihood that President-elect Joe Biden will switch out FHFA boss Mark Calabria for a Democratic pick.
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SCIO Capital reunites Deutsche ABS veterans with new advisory board
Investment firm SCIO Capital has appointed three ABS professionals to its newly founded advisory board, reuniting a group of Deutsche Bank veterans who worked at the bank in the early 2000s.
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Middle-market deals set to fire up CLO primary
At least two new middle-market CLO deals and two resets are being readied to open up a primary market that has been quiet since the end of October.
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Burger chain cooks up whole biz ABS
Fast food franchise company CKE Restaurants Holdings priced a $400m whole business securitization several points tighter than initial pricing thoughts. With Roark Capital as its sponsor, the transaction stands out among other brands for its reliable performance and name value, sources say.
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Dongfeng Nissan plans swift return to China ABS
Dongfeng Nissan Auto Finance Co is set to launch a Rmb4.9bn ($747m) auto loan asset backed securitization next week.
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Aircraft ABS spreads tighten but collateral stress remains
The aircraft ABS market saw spreads tightening by as much as 75bp last week, driven by optimism over coronavirus vaccines, and spreads are continuing to benefit from the hope that travel will soon recommence. Despite the market’s positive reaction, sources caution that the tightening could be short-lived, as it will take longer than anticipated to see collateral performance fully recover to pre-pandemic levels.
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Dutch debut sees Citi planning multi-year RMBS shelf
Citi is planning to issue at least two deals a year from its new Dutch buy-to-let RMBS programme, putting the Jubilee deals on par with the bank’s Canada Square shelf in terms of issuance. Citi released an update for the €213m Jubilee Place 2020-1 on Tuesday, guiding the class ‘A’ notes in the 110bp area.
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Canada-based manager gains SEC approval, buys Garrison CLOs
Mount Logan Capital has acquired management rights to two middle-market CLO contracts from Garrison Investment Management. The asset manager disclosed the acquisition in an announcement and said that it paid $3m to take over the two CLOs together with “certain side letter agreements”.
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Indiana pension fund invests $60m in CLO equity and debt tranches
Indiana Public Retirement System has committed $80m to Oak Hill Advisors Structured Products Fund II to invest across CLO debt and equity tranches in the US and Europe in the secondary market, according to a board meeting document.
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European CLO managers see 2021 primary slump
The first quarter of 2021 is set to be a cautious opening for the European CLO market, with many banks still unwilling to open new warehouses, given the volatility of this year. Sources anticipate just five to six deals landing in the first quarter.
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Sunnova, Loanpal light up solar ABS sector
Sunnova is entering the ABS market with a deal backed by residential consumer solar loans, shortly after Loanpal made its return. With yields still at all time lows, solar securitizations have appealed to investors and traders for their high returns, and a transaction structure that looks more like a mortgage product than an esoteric ABS.
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BNPP sets up €500m warehouse with German consumer lender
Private-equity backed Auxmoney, the largest credit marketplace in Continental Europe, is planning to originate its own equity for consumer loans with the help of BNP Paribas, setting the firm on track to potentially securitize its assets.
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Jefferies, Kennedy Lewis commit $160m to TCW CLO business
Jefferies and Kennedy Lewis Investment Management will invest $160m with asset manager TCW to boost the firm's CLO issuance program over the next two years.
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Sources say new mortgage servicer rules an 'overreach'
State regulators announced a set of ‘safety and soundness’ standards for non-bank mortgage servicers, which include higher capital and liquidity requirements. While the new rules are aimed at providing better protections during a stress event, sources argue that states are imposing too harsh a standard on the private, non-deposit taking institutions.
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UK RMBS market hunts for solutions to legacy Libor switch
Kensington Mortgages and Yorkshire Building Society are looking into replacing the Libor benchmark with Sonia plus a spread adjustment for legacy contracts, easing the switch of sterling RMBS bonds while the UK market awaits further guidance from its regulator.
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CLO equity offers opportunity but few funds stand ready
CLO equity is still a scarce commodity, despite better than expected performances from the asset class this year in the face of the pandemic. Some investment firms are said to be raising CLO equity funds, but others suggest it remains hard going, and managers with captive funds will remain in charge.
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EU auditor: CMU ‘results still to come’
The European Court of Auditors has said that the EU’s Capital Markets Union still needs a lot of work and that obstacles to capital flowing across borders often relate to national laws. It also did not see signs of growth in the securitization market.
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CLO pipeline builds but managers nervously eye defaults
The fractious final phase of the presidential election has suspended CLO issuance since October 30. New issuance is expected to resume at steady pace through to the end of the year, but CLO managers say they are concerned about a new wave of defaults as the economy limps into 2021.
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Upstart files for IPO as longer-term questions loom
Marketplace lender Upstart announced its plans to go public, leveraging its recent success in bringing the company to profitability in the fourth quarter of 2019. However, sources say a competitive marketplace and a reliance on a handful of bank partnerships will pose challenges for the company.
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Parliament passes securitization ‘quick fixes’
The European Parliament voted on Tuesday to pass a package of amendments to the securitization framework aimed at freeing up bank balance sheets and increasing lending to the real economy. The so-called "quick fixes" were left largely unchanged, helping the proposals push quickly on to the trilogue process.
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Citi brings principal Dutch RMBS from new BTL shelf
Citi is making its Dutch buy-to-let RMBS debut, with the first deal from its new Jubilee Place shelf, which brings together mortgages from three different originators. A full stack €213m deal is on offer, with the equity pre-placed and Citi holding the retention.
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Debt buyer double as Hoist and Encore prep refinancings
Debt purchasing firms Encore and Hoist launched new refinancing transactions on Wednesday, taking advantage of good market conditions to strengthen their capital structures ahead of a likely NPL flood next year.
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VW returns to China ABS with bigger revolver
Volkswagen Finance (China) priced a nearly Rmb8bn ($1.2bn) auto loan asset-backed securities deal this week, the eleventh in its Driver China series.
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Blackstone to rename GSO credit unit
GSO Capital Partners, the credit management arm of private equity giant Blackstone, is rebranding itself as Blackstone Credit, the company announced this week.
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For the good of all society retail payment relief must be a two-way street
With the UK in its second lockdown, there is growing frustration among commercial landlords that retailer tenants are taking advantage of payment waivers. It is vital for the health of the commercial real estate sector and the pension funds that finance it that this is not allowed to happen.
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Covid-19 will reshape US student debt more than Biden
US president-elect Joe Biden’s student debt relief plan is a dialled down version of what Democratic candidates were proposing on the campaign trail in the run up to the 2020 election. But rather than focus on the incoming president’s priorities, observers should be thinking about the lasting impact of the Covid-19 pandemic on the $1.6tr of outstanding student debt.
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Biden win creates new headwinds for fintech, mortgages
Fintechs and mortgage lenders are eyeing the incoming administration with trepidation, as president-elect Joe Biden is likely to switch out the leadership of key agencies. While there won’t be drastic changes coming out of Congress, the president has power to remove single agency heads without cause, following a recent decision by the Supreme Court.
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CarVal to securitize last of Catalunya Banc mortgages
CarVal Investors is bringing its second Spanish RMBS securitization backed by re-performing loans originated by Catalunya Banc, mandating Natwest as arranger and Barclays and Standard Chartered as joint leads to syndicate the remainder of a portfolio it acquired from Blackstone.
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Great Wall parks internationally rated ABS with investors
Chinese auto finance company Tianjin Great Wall Binyin Automotive Finance Co got an international rating yet again for its return to the auto loan asset-backed securities market, a move that bankers say is in line with its ambitions to becoming more global.
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Ex-Ares trio launch CLO management business
A trio of former Ares Management executives have launched a CLO management business with a particular focus on environmental, social and governance (ESG) investments.
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CRE tenants and landlords clash during second lockdown
European retail landlords are facing up to potential damage of Europe's wave of second lockdowns, with many tenants continuing to ask for full rent relief despite trading for three months at least over the summer, throwing the sector's long term health into doubt.
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Thames Water preps tender to term out holdco debt
Thames Water’s holding company is preparing a sub-investment grade bond and tender offer to push out its 2022 maturity, launching the new offer as markets firmed up on Monday.
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In Biden win, market grows hopeful for pandemic plan
Capital markets cheered the victory of president elect Joe Biden on Saturday, hopeful his presidency will prove more predictable than the four years of the Trump administration. As the US grapples with a resurgence of Covid-19 infections, sources say they are optimistic that Biden will provide more concrete plans to guide the nation through the pandemic.
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Trinity completes second railcar ABS since pandemic
Trinity returned to the securitization market with back to back deals for the first time this year. Sources say the railcar sector will likely benefit under a Joe Biden administration as they believe the Democratic candidate will soothe trade war tensions with China and boost global trade.
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Alpha Bank receives binding bids on Hercules NPL portfolio
Alpha Bank has received two binding bids for the sale of an NPL portfolio worth around €10.6bn, closing the securitization process via Greece's Hercules guarantee scheme and cleaning its balance sheet to make way for new lending.
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Wells Fargo slashes award winning CLO research desk
Wells Fargo has laid off its prolific CLO research team led by David Preston as part of a decision at the bank to revamp its approach to fixed income research, according to people familiar with the matter. The US banking giant is searching for a new head of ABS and CLO strategy, according to a job posting published on Thursday by executive search firm The Ladders.
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ECB supervisor’s bad bank dream faces huge obstacles
The European Central Bank is offering renewed support to the idea of the EU creating a ‘bad bank’ or an asset management company to manage a flood of non-performing loans engulfing European banks, fuelling expectations that this will be part of the European Commission’s forthcoming NPL strategy. Jon Hay and Owen Sanderson report.
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Alantra targets performing loans with new securitization build-out
Alantra, the boutique investment bank in Spain, wants to expand its securitization franchise beyond its existing strengths in NPL deals, boosting its position as an advisor for specialist lenders in performing credit and structurer of risk transfer deals for Europe’s smaller banks. Francesco Dissera, who started at the firm in mid-October, will lead the team’s growth efforts.
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Private sector buyer joins water securitization programme
Notes in an infrastructure securitization programme called Viveracqua Hydrobond have been placed with a private sector buyer, Kommunalkredit Austria, for the first time, in a major step forward for an unusual asset class.
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Mercedes-Benz Leasing debuts China auto lease ABN
Mercedes-Benz Leasing Co sold its first auto lease asset-backed note in China’s interbank market this week, navigating a number of hurdles to launch the Rmb4bn ($600m) deal.
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CLO market waits for dust to settle before deal flow restarts
As Tuesday's vote count looks likely to drag into Thursday without a clear winner in the US presidential race, the CLO space is likely to remain stalled through next week after managers raced to get ahead of the US election to price around $13bn of deals in October.
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Disappointing 'blue wave' dashes hopes for heftier stimulus
US securitization players say they were surprised and disappointed that a Democratic “blue wave” failed to materialize as the results of Tuesday's election rolled in. With Republicans looking likely to hold the Senate and Democrats holding the House, market participants are anxiously expecting a smaller and delayed Covid-19 stimulus package regardless of who wins the presidency.
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Market pushes back on STS lobby proposals for CLOs
The Alternative Credit Council (ACC) has recommended allowing CLOs to obtain a ‘simple, transparent and standardised’ (STS) certification to increase the flow of funding to European borrowers. Investors have pushed back on such proposals, however, citing the heavy due diligence needed to invest in STS deals.
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European ABS market confident despite US vote anxiety
The European ABS market remains confident despite the inconclusive outcome of the US presidential election as GlobalCapital went to press on Wednesday. The sector is one of the few capital markets to see deal activity this week, with Citizen Irish’s auto ABS pricing late on Wednesday.
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Navient, CommonBond get deals off ahead of election
Navient and CommonBond both brought private credit student loan ABS deals to the market on the cusp of US elections. Depending on the outcome, lenders will have to navigate a sector fraught with risk as reform supported by the Democrats could tamp down student debt in borrowers’ payment priority.
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CIO of structured credit investor Medalist steps down
Medalist Partners has parted ways with CIO Brian Herr, who stepped down as CIO and co-head of structured credit and asset finance to take up a role as managing director at financial services company Exos.
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Citi and Deutsche rev up Irish auto ABS as US election kicks off
First Citizen Finance is the only issuer out in the European ABS market this week, marketing an Irish auto ABS deal on the day of the US election, aiming to price between the high 70bp-80bp.
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Alantra hires head of securitization from Santander
Francesco Dissera, head of securitization at Banco Santander, is joining Alantra’s newly created securitization team.
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Beijing Hyundai test drives revolving structure
Beijing Hyundai Auto Finance decided to try a revolving structure for its Rmb4bn ($597m) return to the asset-backed securitization market in China, getting an around two times subscribed book.
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Kayne Anderson, Napier Park price new five year CLOs
Kayne Anderson Capital Advisors and Napier Park Global Capital each priced CLOs on Friday with pre-Covid reinvestment durations, joining a growing roster of managers that have returned to more normal CLO structures. Though they are becoming more frequent, sources say they expect the market to remain split between standard and Covid-era deal formats.
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SoFi gets green light from OCC for bank charter
Marketplace lender SoFi has received approval from the Office of the Comptroller of the Currency (OCC) to obtain a national bank charter, boosting its position as a contender among incumbent banks and online lenders active in the ABS market.
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Second UK lockdown heightens RMBS uncertainty
The Financial Conduct Authority has opted to give UK borrowers the option of deferring mortgage payments for another six months, after prime minister Boris Johnson announced a second four week lockdown across the UK on Saturday, with the possibility of a further extension.
