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Polls and Awards

Esoteric ABS Bank of the Year — Guggenheim Securities

There’s a saying that once is luck, twice is coincidence, and three times is a pattern. While we don’t wish to become the in-house newspaper of Guggenheim Securities, once again, following victories in 2019 and 2020, the firm has exceeded our expectations when it comes to the depth, breadth and quality of its securitization activities, and for that reason, we have chosen to award it Esoteric ABS Bank of the Year.

US securitization

Last year was unusual in the capital markets, to say the least, with the initial chaos and panic in the market giving way to an extraordinary rally through the rest of the year, and market participants forced to adapt to new ways of working and new economic realities. 

This meant new trends and new approaches in securitization, as well, with ABS markets to the fore in providing emergency liquidity to restaurant chains, gym units, and auto rental firms. When financing conditions are tough, issuers turn to secured funding, while investors sought bargain exposures to high quality companies.

Guggenheim proved more than able to adapt to these conditions, in part due to its unique business model. With a top-tier team of veteran securitization bankers, it operates largely as an adviser or underwriter, with a focus on the most creative and efficient structured finance solutions for marrying third party capital with productive uses in all market conditions, rather than leading with its balance sheet, as many of its peers do.

That meant when banks were worried about their own credit exposures and warehouse lines, Guggenheim was on the front foot. 

“We weren’t cutting back our lending, and we didn’t have the distraction of having to manage down risk on our balance sheet, so we were able to focus on placing deals for clients,” says Cory Wishengrad, head of fixed income at Guggenheim. “The fact that we re-opened the ABS markets with the first 4(a)(2) and 144A transactions following the initial panic is a strong validation of our strategy. At the same time, when new funding was difficult to access for COVID-impacted businesses, we were also active in helping borrowers bolster their balance sheet, such as placing liquidity facilities for whole business securitization issuers in the restaurant space and receivables transactions for distressed companies, further illustrating the value-add we deliver to our clients.”

Cory Wishengrad, head of fixed income, Guggenheim

The transaction that re-opened the 4(a)(2) market was a financing for Diversified Gas & Oil (DGO) executed on March 28, with the first wave of Covid chaos still reverberating through the markets. The deal securitized interests in proven developed producing oil assets, hedging the commodity price exposure and scoring an investment grade rating. To further complicate the situation, at the time of pricing, oil prices had plunged by more than 40 percent year-to-date.

The DGO financing was followed by the Sabey Data Centers transaction that Guggenheim brought to market in April 2020.

 “You would have expected the market to reopen with a triple-A auto or credit card deal, something more highly rated and more down the middle of the fairway, but we were early to recognize that data centers would perform particularly well in a pandemic and post-pandemic environment, and we were able to provide confidence to the market,” says Wishengrad.   

The deal needed careful execution, however, and blended a pre-sounded but broadly distributed 144A tranche with a privately placed 4(a)(2) tranche — a market trend which Guggenheim has been pioneering and expects to continue to grow, with private securitization flourishing alongside private equity and private debt.


 As the year continued, so did Guggenheim’s run of sole structuring mandates across the more unusual areas of the ABS market — which this award is specifically intended to recognise — with transactions securitizing venture debt, agricultural loans, media rights receivables, other intellectual property rights and diamond receivables.

But the year’s highlight was surely Hertz — one of the largest bankruptcies ever in the US, and now one of the biggest comeback stories, thanks in part to the company’s restructured fleet financing.

Guggenheim acted as sole structuring adviser to Apollo for the company’s $4bn debtor-in-possession financing, Hertz Interim Vehicle Financing 2020-1. Apollo and its insurance affiliate Athene provided the facility, which was extraordinary in every way — one of the largest and cheapest DIP financings ever executed, and one of only a handful of securitized debtor-in-possession financings.

“The Hertz transaction was fundamental to one of the largest bankruptcies in American history, triggered as a result of the pandemic, and offers a great illustration of creativity in the securitization market, and of the emerging themes that we’re seeing, such as institutional investors, particularly in the insurance space, displacing the banks with more efficient forms of financing,” says Wishengrad.   GC

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