GlobalCapital: Nomura has now been voted RMBS Bank of the Year three times in a row — what do you think has enabled the firm to remain a leader in such a dynamic space?
Patel: Consistency across the business and consistency in how we approach clients in the market. Nomura has built a business focusing on asset classes that others have historically shied away from. We’ve been a leader in SFRs and RTLs for a long time. We’ve shown clients that through good markets and bad our balance sheet and our commitment to them are solid. Many of those clients have gone from focusing on one asset class to operating across six or seven different ones — we’ve been with them through each of those evolutions. Our balance sheet has evolved in parallel and we now have a very diverse business with a competitive edge in creating the right structures for clients.
GlobalCapital: What were the major themes in the US RMBS market in 2024, and how did Nomura position itself to respond?
Patel: In 2023, new issuance was down significantly and bank balance sheets were much heavier. We maintained higher funded positions with clients and didn’t force issuers into a bad market. That supportive approach really bore fruit in 2024. In 2023 we completed 75 transactions where we were either sole lead or lead left for $25bn. In 2024, primarily because we supported clients with capital and balance sheet capacity during a difficult market, we ended up executing 150 transactions totaling $54bn. That’s our best and most active year in the history of the RMBS business at Nomura post-GFC.
Quinn: The key is working with clients and identifying opportunities for financing. That could involve providing our own capital to finance clients from a warehouse perspective, or offering permanent financing through securitization, if market conditions are right. In 2024, the market was buoyant , and we capitalized on that. In more volatile times, you have to be nimbler and more selective. That’s something we excel at: working closely with clients and investors to understand how they’re approaching the market.
GlobalCapital: Where do you see the most client demand in RMBS right now and how is Nomura responding?
Patel: Over the last 24–36 months we’ve built the franchise around providing multi-asset financing facilities. We have become a one-stop solution for different client needs — whether it’s MSR financing, non-QM, scratch-and-dent, EBOs, RPLs etc. We’re also very focused on providing liquidity to clients across new origination but also in the secondary trading market. It’s very easy to do loan financing, but the piece no one really talks about is the kind of liquidity that the trading desk is providing to support those shelves.
Hargrave: Our approach to secondary trading in RMBSis to view it very much in conjunction with the new issue securitization business. From my perspective, it’s part of a broader initiative — it’s not just a standalone trading desk. We have very senior people trading those products. They are, in effect, managing many of the client relationships on a daily basis. So it’s how you show up in those day-to-day situations that matters.