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EU Securitization Deal of the Year – Stratton Hawksmoor 2022-1, BofA

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Bumper £2.1bn deal priced in August while many others struggled to issue

Stratton Hawksmoor 2022-1, a Davidson Kempner transaction led by Bank of America, has clinched GlobalCapital’s European securitization Deal of the Year award. The deal impressed because it achieved a tight pricing with a vast legacy collateral pool at what appeared to be a difficult time for the market.

Issuer Davidson Kempner worked with law firm Allen & Overy and Bank of America to refinance four legacy deals in a £2.1bn UK RMBS trade that was priced on August 4.

Late spring and early summer 2022 was a turbulent period for the European securitization market. In the run up to Stratton Hawksmoor 2022-1 many issuers were struggling to build order books and the economics of refinancings were particularly difficult.

However, Tristan Cheesman, head of EMEA/APAC structured finance syndicate for Bank of America, says that the bank had spotted a window of opportunity in August. He believes that Bank of America’s decisive action to close the deal at that time reflected one of the main themes of the year: providing issuers with execution certainty in spite of broader market volatility.

“We were very cognisant of taking advantage of the window that presented itself and this one happened to be in August,” Cheesman adds. “It’s important that deals were getting done in June [and] July so we could have discussions with investors about relative value.”

The scale of the deal made it particularly tricky. When it was issued, Stratton Hawksmoor 2022-1 was the largest European securitization deal of the 2022 so far. It took collateral from four legacy deals, including two deals priced before 2008.

Calling the deals, Hawksmoor Mortgages 2019-1, Stratton Mortgage Funding 2019-1, Clavis Securities Series 2006-1 and Series 2007-1, was important for Davidson Kempner.

This is why, according to Bank of America managing director, Prashant Sood, his team was chosen to run this deal. Bank of America had a “track record” with this issuer, Sood says. The bank had impressed with the breadth of its platform, along with its distribution capabilities on large strategic transactions.

Crucially, Bank of America was able to confirm a large order that was committed early in the marketing process, reducing execution risk and giving the issuer the certainty it craved.

This also enabled Bank of America to focus on placing the more junior tranches. Ultimately, seven tranches were sold to investors — and at good prices for the issuer.

“Placing the triple-As all the way down to the single-Bs at the pricing levels achieved was significant given the market backdrop at the time,” Cheesman says.

Gregory Petrie, Bank of America's head of EMEA origination, praises the whole Bank of America team for their work on the deal.

“Success was due to global partnership within Bank of America’s mortgage team — across banking, analytics, sales and trading,” says Petrie.