It is a rare thing for a firm as large and mature as Morgan Stanley to show rapid growth in a major product vertical — let alone one as established and competitive as securitization. But that is exactly what the firm has done. Looking across the major asset classes, the bank has jumped 17 league table spots in aggregate since 2020. “We recognized around five years ago that we had a rebuild to do in securitization, and we’ve been executing that ever since,” says Rich Myers, Global Head of Securitized Products Capital Markets and Private Capital Markets. “There is more to do to reach our full potential, but I think the results are clear in terms of the growth in our franchise — both by volume and revenue.”
Myers emphasises that integration, both within the business line and across the firm, is a core part of Morgan Stanley’s overall strategy. The bank’s cutting-edge securitized products business is fully integrated across its capital markets, lending, and sales & trading functions, while also closely coordinated with investment banking coverage and other capital markets teams. “It’s about delivering a unified client offering, with a consistent strategy around which clients we’re targeting, and how we’re delivering integrated coverage and comprehensive product capabilities,” he says. “We can sit across from a CFO with an extensive and coordinated approach to whatever their financing or capital-raising goals are; our capabilities span from ‘flow’ new issue business and warehouse lending through to ‘event’ transactions in acquisition finance and ‘loan solutions’, which is our dedicated advisory team for large portfolio sales, risk transfers, and strategic partnerships.”
Excellence in esoteric
If rapid growth and integration are the first two foundations of Morgan Stanley’s securitization success, the third is leading innovative landmark deals. There was no shortage of these in 2024. Morgan Stanley led nine first-of-their-kind deals, including the largest ever whole business securitization for Subway, as part of its acquisition by Roark Capital. That landmark transaction was awarded Esoteric ABS Deal of the Year. Lauren Miller, Head of Esoteric Securitization Origination, notes the firm is leading the way in many of the fastest growing sections of esoteric ABS, such as digital infrastructure.
“That sector is at an inflection point in terms of industry growth,” she says, pointing to an AI-driven surge in data centres and wireless providers’ rapid fibre roll-out. Morgan Stanley covers digital infrastructure across all asset class verticals and financing structures, ensuring clients have access to capital that best fits their needs. “We give clients optionality and structural ideas to make the most of the securitized markets over time,” says Miller. “It’s all about that ‘one firm’ view — offering not only structured finance and capital markets capabilities, but also lending and strategic advisory services alongside them.”
RMBS innovation
Residential securitization might be a more mature asset class than esoteric ABS, but Morgan Stanley’s focus on innovation was no less evident in 2024. The bank brought the RMBS Deal of the Year — Toorak Mortgage Trust’s 2024-RRTL1. This was the inaugural rated Residential Transition Loan (RTL), on which Morgan Stanley acted as structuring agent and left lead
bookrunner. The bank’s involvement reflects both its role as an early driver of the non-rated RTL market, and months of work to make the inaugural rated deal happen.
“We began working with multiple rating agencies, and Morningstar DBRS was the first to really come to market with a methodology,” says Cheryl Glory, Co-Head of Residential Securitization. After DBRS published its criteria, Morgan Stanley’s team spent nearly a year working with the agency knowing that Toorak was aiming to be the first rated issuer in this space. “Innovation is really how we lead,” says Glory. “Helping move the non-rated market into a rated environment is just one example.”
In another landmark mortgage-related transaction, Morgan Stanley served as sole advisor to Banc of California on its $2bn sale of business-purpose residential mortgage loans, a deal that required full coordination between the residential securitization, loan solutions, and investment banking coverage teams.
CLO collaboration
Completing their trifecta of transaction awards was the CLO Deal of the Year, which went to GoldenTree Loan Management US CLO 23. Kylie Duff, Head of CLO Origination, says the asset class has always been “near and dear” to Morgan Stanley, which is evident in the bank’s long-term partnerships with managers. “GoldenTree is one of the longest and most consistent partnerships we have, and you really get to know each other’s strengths and capabilities” says Duff, emphasising the unique nature of the regular tri-party syndicate arrangement that contributes to the firm’s unrivaled execution.
With CLO issuance at record volumes in 2024, Morgan Stanley’s focus on integration was key in helping it differentiate its offering while keeping up with a frenetic market. Duff highlights the close partnership between the CLO origination franchise and the bank’s CLO equity trading desk when it comes to origination. “Similarly, we work very closely with our loan trading desk,” she says. “They are an important component of the new-issue machine by virtue of their ability to asset-source.” The global nature of CLOs means collaboration on the distribution front is also critical. Morgan Stanley distributes a meaningful volume of its CLO paper into Japan and Europe, as well as domestically. “That really requires us to be very closely linked to our distribution and our product managers in those regions,” says Duff. “This overall integrative approach is paramount to our success.”