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 Issue 573 - 12th January

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News Analysis
Capital Relief Trades
CRTs coming to America?

Capital relief trades (CRTs) have become an established feature of the European securitisation market, with multi-billion euro deals frequently issued to achieve regulatory capital relief (see SCI's capital relief trades database). Although these transactions have not yet been embraced by US banks, that is expected to change.
Rumours of US CRTs in the offing continue to circulate. Sources suggest there is substance to these whisperings.

"While capital relief trades are now fairly well established in Europe, there has been very limited use by US banks. Despite the lack of historical activity, we are aware of ongoing discussions at a number of banks and transactions with the potential to hit the market in the intermediate term," says Kaelyn Abrell, partner and portfolio manager, ArrowMark Partners.

Since the financial crisis, US banks have been focused on fixing up their balance sheets and disposing of problem loans. They have generally had more options open to them than European banks have in this regard and have been far more frequent users of the securitisation market, so they have not leaned on CRTs in the way that European banks have.

"The US banking sector is now well capitalised and banks are focused on improving shareholder returns. CRTs will start to become more appealing to US banks when they struggle to improve performance," says Abrell.

The way that the CRT market developed in the Europe was with the larger banks first and it would be reasonable to expect the same pattern in the US. Those largest banks have the most sophisticated financing and greatest in-house expertise. Similarly, US banks are likely to use the same kind of assets as have been used in Europe.

"US banks will use CRTs to improve profitability, drawing upon templates from existing issuers in developed markets. Large corporate loans and revolvers are an obvious example, as the market is well defined and easier for first-time issuers to navigate," says Abrell. Synthetics are much more useful for corporate lending than for lower risk assets such as mortgages.

Abrell adds: "Large US banks are already holding large corporate loans and revolvers on their balance sheets and we believe it makes the most sense for them to start with proven markets. Because US banks typically hold higher quality assets, the CRT structures will likely differ slightly from what is seen in Europe to account for the reduced loss profile."

The typical deal length in Europe is 5-8 years, with double-digit yields common. US CRT deals may be structured to offer lower spreads, but can still be expected to offer attractive reward for the risk. That should appeal to investors.

"We believe investors would embrace the opportunity to open up the US CRT market due to the increased diversification of transactions and access to new issuers. CRT deals have increasingly used US-based collateral, so there is demonstrated appetite for the collateral," says Abrell.

She continues: "The trend is interesting because loans to US borrowers tend to offer greater transparency due to the availability of third-party ratings. Increased financial transparency lends itself well to the CRT market."

With momentum building, there are hopes that a US CRT may debut this year. Abrell believes we are getting close to that point.

She says: "With the expansion of the asset class over the last couple of years, opening of the US CRT market now seems inevitable; it is a case of when, rather than if. We would be surprised if the US market did not experience material development over the next two years."


8 January 2018 09:22:52
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News Analysis
Capital Relief Trades
Barclays adds to US CRT impetus

Barclays recently completed Colonnade Global 2017-4 Financial Guarantee, a rare US$100m risk transfer transaction referencing a US$1.25bn portfolio of US corporate loans. Adding impetus to a growing American capital relief trades market (SCI 8 January), the jurisdiction of both the deal's counterparty and investor is the US.

Rated by DBRS, Colonnade Global 2017-4 comprises US$1bn triple-A rated class A notes, US$18.6m double-A class Bs, US$5.9m double-A class Cs, US$7.25m double-A class D notes, US$21m single-A class Es, US$3.25m single-A class Fs, US$11.4m single-A class Gs, US$19.9m triple-B class Hs, US$4.25m triple-B class Is, US$6.5m triple-B class Js and US$21.6m double-B class Ks.

The transaction - which closed among a slew of risk transfer deals in December (see SCI's capital relief trades database) - saw Barclays buying protection for the first loss piece, but it has not yet executed the contracts relating to the rated tranches. Under the unexecuted guarantee agreement, the bank will transfer 92% of the credit risk from the US$1.25bn portfolio.

Under the senior guarantee, Barclays will buy protection against principal losses, as well as accrued interest prior for a period of seven years. This type of protection is common for Colonnade transactions and beneficial from a regulatory capital perspective (SCI 8 September 2017).

The transaction has a two-year replenishment period, during which time Barclays can add new loans to the portfolio.

This latest Colonnade deal reflects the expansion of the risk transfer market in Europe and the US. "Capital relief trades were the sole province of European banks, given that US banks are not capital deprived. That said, European banks are increasingly better capitalised. I would expect to see more of these transactions in the US, as banks begin to solve for better ROE performance," says a US investor.

Since the financial crisis, US banks have been focused on fixing up their balance sheets and disposing of problem loans. They have generally had more options open to them than European banks and have been far more frequent users of the securitisation market, so they have not leaned on CRTs in the way that European banks have. US banks therefore are expected to use CRTs to improve profitability, drawing upon templates from existing issuers in developed markets.

In particular, the US investor observes that deal structures are becoming more uniform in terms of tenor, term and documentation. They tend to be financial guarantees or CDS, with fairly standard five-year terms and three-year non-call periods. Furthermore, banks are becoming more transparent in respect of the underlying reference obligations, with blind pools becoming much less common.


11 January 2018 16:57:18
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Structured Finance
SCI Start the Week - 8 January
A look at the major activity in structured finance over the past seven days.

There were a few deals added to the pipeline in the first week of the year. These were four ABS, an RMBS, a CMBS and a CLO.

US$190m CPS Auto Receivables Trust 2018-A, Driver Japan Seven, E-CARAT 9 and US$1.24bn GM Financial Consumer Automobile Receivables Trust 2018-1 accounted for the ABS. The RMBS was Finsbury Square 2018-1, the CMBS was Natixis Commercial Securities 2018-TECH and the CLO was Cairn CLO X.

A couple of CMBS and a CLO went the other way. The CMBS were US$570m Atrium Hotel Portfolio Trust 2017-ATRM and US$800.5m FNA 2018-M1, and the CLO was US$331m Great Lakes CLO 2015-1R.

Editor's picks
Santander, Lloyds ride synthetic CMBS wave: Santander and Lloyds have each put together synthetic securitisations of commercial real estate portfolios. The financial guarantees and significant risk transfer deals are the first in a wave of post-crisis synthetic CMBS issuance...

CSP testing delay 'minor issue': Testing of the Common Securitization Platform (CSP) (SCI passim) has carried on into the New Year, slipping past the FHFA's original deadline. This is the second significant delay of the last 12 months, after the announcement in 1Q17 that Release 2 of the CSP was being pushed back to 2Q19 to allow extra time for testing...

Deal news
Banca IFIS has closed two new Italian NPL transactions totalling around €200m. The latest transactions bring the bank's NPLs under management at end-2017 to over €13bn, while confirming €5bn in total expected NPL acquisitions for 2017.
China Asset Leasing Group Holdings (CALC) has launched China's first ABS denominated and settled in a foreign currency. It is also China's first ABS in aircraft leasing in the public placement market.
Dynamica Retail has issued its first salary assignment and payment delegation loans transaction in Italy. The transaction has a subscribed amount of €166.1m and a maximum note amount of €263.5m. Dyret SPV is a revolving cash securitisation of consumer loan receivables.
• Willis Towers Watson placed €90m of ILS for Covea Mutual Insurance Group last month in a "unique transaction". The transaction was the first time a European catastrophe bond has supported capacity at the bottom of a traditional reinsurance programme and also the first time a European indemnity-trigger cat bond was placed on an annual aggregate basis, the company says.

8 January 2018 10:36:10
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Capital Relief Trades
UBI Banca debuts SRT

UBI Banca has executed its first capital relief trade, dubbed UBI 2017 RegCap 1. The approximately €100m cash collateralised financial guarantee references a €1.9bn corporate portfolio.

According to Simone Tufo, head of capital management at UBI Banca: "Financial guarantees have been used extensively in the market, so we had plenty of benchmark cases to look at. However, this is only the beginning. We will be looking at other structures going forward."

Amortisation will be allocated on a pro-rata basis and the WAL is 2.4 years. Other features include a time call, whose execution is subject to the transaction's stated WAL.

The transaction closed in late December, along with another synthetic securitisation between UBI Banca and the EIF.

Looking ahead, the Italian lender confirms that it intends to proceed with more programmatic risk transfer issuance.

As of September 2017, UBI Banca Group's Common Equity Tier 1 ratio stood at 11.65% (compared to 11.42% in June 2017), while its total capital ratio stood at 14.32% (14.06% in June 2017). The pro forma CET1 ratio is estimated at 11.54% (11.32% in June 2017).

The leverage ratio stood at 5.82% (5.66% in June), while fully loaded indicators stood at 5.77%.

According to the group's 2019-2020 business plan, the fully loaded CET1 ratio - which doesn't take transitional provisions into account - is expected to rise from 11.6% at end-2015 to over 12% in 2019 and to approximately 12.8% in 2020. The total capital ratio is expected to increase from 13.9% at end-2015 to 15.7% in 2019 and to 16.3% in 2020. Finally, the fully loaded leverage ratio of 5.8% at end-2015 is expected to rise at over 6% in both 2019 and 2020.


10 January 2018 17:33:19
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Capital Relief Trades
Risk transfer round-up - 12 January

Details have emerged of a Lloyds capital relief trade dubbed Cheltenham Securities 2017. The transaction was executed in late December (see SCI's capital relief trades database). The £40.524m CLN references a £517m portfolio of UK mid-market loans and matures in August 2022.

During the same period, the EIF guaranteed a €330m portfolio of Austrian and German loans to SMEs and mid-caps originated by Hypo Vorarlberg Bank. With this financial support, Hypo Vorarlberg will expand its lending to households and corporate customers undertaking energy efficiency-related refurbishments or constructing near zero energy buildings. This marks the first EIB transaction with an Austrian bank benefiting from the support of the European Fund for Strategic Investments (EFSI).

Meanwhile, Nordea is rumoured to have cancelled a corporate risk transfer transaction that was initially planned for 4Q17.

12 January 2018 11:39:24
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Euro 2.0 CLO programme debuts

Natixis has closed its first European managed cashflow CLO 2.0 deal. Dubbed Purple Finance CLO 1, the €308.4m transaction is managed by Natixis Investment Managers affiliate Natixis Asset Management and is backed by primarily senior secured euro-denominated leveraged loans and bonds issued by European borrowers.

Moody's and S&P have assigned Aaa/AAA ratings to the CLO's €173.70m class A notes (which priced at three-month Euribor plus 80bp), Aa2/AA to the €45.70m class Bs (plus 130bp), A2/AA to the €20.40m class Cs (plus 175bp), Baa2/BBB to the €15m class Ds (plus 280bp), Ba2/BB to the €13.80m class Es (plus 505bp) and B2/B- to the €9.5m class Fs (plus 700bp). There is also an unrated €30.3m subordinated note.

The portfolio is diversified across various business sectors and geographies and consists of around 100 corporate debt obligations. Of the assets, 95% must comprise senior secured loans and up to 5% unsecured obligations, second-lien loans, mezzanine loans or high yield bonds.

The deal is expected to be approximately 67.7% ramped as of the closing date and the reinvestment period ends approximately four years after closing. The rated notes pay quarterly interest, unless there is a frequency switch event, whereby the notes permanently switch to semi-annual payment.

Natixis comments that "most of the Purple Finance CLO 1 tranches were oversubscribed" and that it aims to launch one CLO each year. The company adds that it is "carefully considering the US market with a view to expansion."

New European CLOs currently in the pipeline include Cairn Loan Investments' Cairn CLO X and NIBC Bank's North Westerly CLO V (see SCI's pipeline).


11 January 2018 17:24:05
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CRE servicing composition tracked

Dwindling CMBS and CRE CDO issuance posed a significant challenge for commercial mortgage servicers over the past decade. As such, servicers have sought greater exposure to loans from non-CMBS investors - including life insurance companies and the GSEs - to maintain portfolio volumes.

US CMBS and CRE CDO loans made up 61% of the unpaid principal balance of the portfolios of commercial mortgage servicers ranked by S&P at end-2007. This compares with only 27%, as of 30 June 2017, even though the assets still accounted for the largest percentage of servicer portfolios.

S&P figures show that at end-2007 GSEs, life insurance companies, third-party investors and assets on servicers' own balance sheets represented 12%, 8%, 6% and 12% respectively of primary servicing UPB. However, by 30 June 2017, Freddie Mac's K- and SB-series securitisations represented 16% of primary servicing UPB alone. The other GSEs accounted for a further 14%, while life insurers, third-party investors and servicers' balance sheets made up 12%, 21% and 9% respectively.

"Freddie Mac rolled out its capital markets execution (CME) securitisations in 2009, which have been a boon to servicers' portfolios," S&P observes. "These changes have helped servicers maintain stable aggregate portfolio volumes and have made their portfolios more diverse in terms of investor type. With a more diverse investor base, our ranked commercial mortgage primary servicers have been training and hiring employees with diverse skill-sets and updating technology systems in order to satisfy varied investor servicing requirements."

For instance, key differences when servicing Freddie Mac CMBS compared to non-agency CMBS include the involvement of fewer parties in the borrower request approval process and stringent response timelines outlined in the GSE's seller/servicer guide, to which servicers must adhere. Freddie Mac also requires that its seller/servicers designate a chief servicing officer, who must attend regular meetings to discuss best practices. Unlike non-agency CMBS, the B-piece investor cannot appoint an affiliate as the special servicer in Freddie Mac CME securitisations.

Combined Freddie Mac K- and SB-series issuance exceeded US$200bn in June 2017, while the amount of outstanding Fannie Mae volume increased to US$166bn last year from approximately US$104bn in 2007. "Because Freddie Mac securitisations and Fannie Mae loans contain primarily multifamily properties, the growth of these assets has led to a corresponding growth in UPB from multifamily properties in our ranked servicers' portfolios. All other property types, except for mixed-use properties, have declined on a percentage basis as compared to 2007," S&P notes.

Multifamily assets accounted for 42% of primary servicing UPB by property type, as of 30 June 2017, up from 24% at end-2007. Office, retail, industrial, lodging, mixed-use and 'other' properties represented 17%, 14%, 3%, 7%, 5% and 12% respectively in June 2017, compared with 22%, 20%, 4%, 9%, 2% and 17% at end-2007.

Away from the GSEs, insurance company loans typically exhibit low delinquency rates due to tight underwriting standards and thus cause less strain on servicers' asset management departments. However, investor reporting is more challenging because the servicer may be servicing loans for a variety of insurance companies that have their own reporting requirements.

Meanwhile, the substantial increase in other third-party investor volume could partly be due to the growth of opportunity and bridge loan funds that finance transitional assets or are in a more leveraged part of the capital stack, according to S&P. "Due to their short-term nature, more complex structure and the fact that they often contain transitional properties, the loans in these funds require more asset management and surveillance activity. Borrowers of loans on transitional assets can also take additional proceeds from the loans through construction or tenant improvement draws, which require close monitoring and more thorough investor reporting," the agency says.

Loan per employee ratios for servicers that handle these types of loans are therefore much lower than loan per employee ratios for most other investor types. Consequently, servicers dedicate more resources to servicing these loans.

Looking ahead, S&P anticipates that its ranked servicers will continue to service a substantial amount of CMBS as the volume of loan maturities steadies and new issuance maintains sustainable levels.


8 January 2018 14:46:54
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MPS NPL securitisation takes off

Quaestio, the Italian rescue fund, has closed its investment in the mezzanine tranche of Monte dei Paschi's €25bn non-performing loan securitisation. The transaction is a crucial part of the restructuring plan that was agreed with European authorities last July and a breakthrough that is expected to boost NPL securitisation deal flow (SCI 5 July 2017).

Quaestio paid €805m in exchange for the mezzanine notes and also plans to carry out its investment in the junior tranche in 1H18, following an expected GACS rating for the senior tranche of the Monte dei Paschi securitisation. The fund will manage the whole operation in relation to both the structure of the securitisation, the loan recovery plans and Monte dei Paschi's recovery platform - which was acquired by both Quaestio and Cerved (SCI 20 October 2017). Monte dei Paschi plans to complete the securitisation by mid-2018.

Quaestio is financed by Italian and international financial institutions and was set up to invest exclusively in NPLs. The fund is currently the largest investor in the Italian NPL market - which accounts for a quarter of Eurozone NPLs - and one of the biggest investors globally in this sector. It is currently involved in four NPL securitisations of approximately €31bn, with a total investment in the region of €2.5bn.


11 January 2018 13:07:57
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Tracker examination impact assessed

A review of the mismanagement of Irish mortgage payment calculations is likely to result in substantial compensation payments. Although implications for the RMBS market are expected to be limited, they could include the reduction of outstanding balances from pay-outs and a rise in prepayment rates, as sponsors repurchase loans that are granted rate rectifications.

The Central Bank of Ireland (CBI) began identifying and pursuing lenders in relation to tracker mortgage-related issues in 2010 and set out the framework for its industry-wide Tracker Mortgage Examination in December 2015. As of mid-December 2017, 33,700 customers had been identified as being subject to a breach of their contractual rights as borrowers, including being charged an incorrect margin on their mortgage or the incorrect interest rate type being applied. Cases where lenders failed to comply with regulatory requirements regarding disclosure of interest rate fluctuations also came to light.

DBRS notes that the number of mistreated accounts - which represents approximately 3.9% of outstanding mortgages - identified to date is low, compared with the size of the overall mortgage market. However, this number is growing rapidly - with over 20,000 accounts identified in 4Q17 alone.

The process for identifying and rectifying mistreated accounts, as implemented by the CBI, is split into three phases. The review is ongoing, but has already led to redress and compensation payments, alongside restructuring of affected loans to remedy the situation.

"Redress and compensation pay-outs are larger than seen in previous mortgage indemnification processes; for example, in relation to the European Court of Justice ruling on Spanish mortgage floor clauses and the auto-capitalisation of arrears in the UK mortgage market. There is a risk of lenders writing off balances and/or reducing interest rates to reflect the redress, but this is expected to trigger repurchase events and/or indemnification payments to the securitisation vehicles," the rating agency notes.

Across the approximately €12.3bn of outstanding Irish RMBS bonds rated by DBRS, mortgages originated by 10 lenders are exposed to the examination. The agency has assessed this exposure and finds that the majority of the mortgages were originated by lenders that are still active in the mortgage market. However, some lenders have ceased lending operations, been sold or become insolvent, leading to uncertainty as to whether securitised loans originated by them will result in liability falling on the securitisation issuers.

DBRS expects originators to repurchase loans that are modified because of rate rectifications or balance reductions and notes that reputational risk is an important motivator for lenders to actively monitor the collateral and repurchase/indemnify RMBS issuers to avoid losses. "Lenders (and RMBS issuers) have been aware of the implications from a securitisation perspective for several years. As a result, they have pre-emptively repurchased loans with expected exposure, such that any indemnification obligation passes back to the originator and away from the securitisation issuers," the agency observes.

Indeed, it says it is aware of recent transactions where the collateral was selected to avoid selling affected loans to the issuer. Further, the CBI has indicated that the affected loans are not concentrated with any single lender and so DBRS anticipates there to be no substantial concentration in a single RMBS transaction.

To date, redress payments have totalled €297m across 20,000 mistreated accounts and an estimated €203.4m still needs to be paid out by lenders.


9 January 2018 17:26:42
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Talking Point
Scenario analysis
Elena Rinaldi, portfolio assistant at TwentyFour Asset Management, examines how robust CLOs are through a recession

ABS is an asset class that lends itself well to detailed underwriting, from onsite due diligence through to cashflow and risk modelling. Specifically within the CLO sector, once TwentyFour Asset Management has reviewed the manager and the collateral, we focus on stress testing and sensitivity analysis. The hypothetical question "what if?" plays a fundamental role in assessing the resilience of the bonds we invest in to severe macro-economic shocks and general business cycles.

Every recession has a different driver; from the dot-com bubble in the early 2000s to the financial crisis 10 years ago, and there remain event-driven tail risk and numerous views on what might potentially cause the next recession. We can ask questions like: What if Brexit is a hard exit? What if Draghi raises rates earlier than expected and affordability becomes an issue? What if there is a hard landing in the Chinese economy?

Although we don't think that we are at the end of the cycle yet, we thought it would be useful to start the year with positive thinking and demonstrate the resilience of one of the largest and favoured sectors within ABS. Focusing on a recent CLO, let's consider how different scenarios could impact cashflows.

Structurally the CLO is a plain vanilla deal backed 100% by floating rate senior secured loans. This transaction has low exposure to both the oil & gas and retail sectors.

Current performance of the European leveraged loan market is very strong, as a result of strong fundamentals and low rates. Prepayment rates have been around 25%-40%, while the current outstanding default rate stands at 1.6% (in fact there are only a handful of CLOs outstanding with any defaults in the pool).

Away from a normal stress test (where we apply static default rates and loss severities in a large matrix) to see where a bond breaks, we are realistic that defaults are never static and come in waves. Consequently, we wanted to create a severe shock in the modelling and one we consider is the average of the dot-com and financial crisis recessions, where triple-C levels and defaults increased dramatically and recoveries on senior secured loans dropped to 50%-60% from the typical 70%-80%.

In our shock test we assumed that the economic shock will happen in two years' time, when default levels increase to 12% and over time recover to a normalised level - with significantly elevated triple-C levels, very low prepayment rates and 50% loss severities. Depending on the manager and the structure, we assumed that the manager has the ability to add value to the deal by buying at higher spreads and lower cash prices. We also tested 'multiples' of this scenario to gauge the sensitivity and be able to compare CLOs.

The outcome is very interesting for the selected CLO: there is no principal loss on the rated notes over the life of the deal. This means that even in a recessionary environment, an investor in the single-B rated note, for instance, will receive all their money back, together with all their coupons (which we see as being the best value in the credit markets at the moment).

Given the average single-B bond has around 7%-8% of credit subordination, that is an impressive result. This is because the deal is doing what it is supposed to: once overcollateralisation tests are breached, these tests show that on a risk-adjusted basis, there is enough credit support and all cashflows to the equity/junior investors will be diverted to deleverage the structure until cured by firstly repaying the triple-As.

In this specific scenario, the stress is so severe that the interest on the double-B and single-B tranches is deferred for 0.5-1.5 years, but fully repaid as the excess spread is enough to cover this. Nonetheless, the equity investor will suffer a significant loss. Despite this, triple-B and higher rated bonds are unaffected from a cashflow perspective, but markets will likely be very volatile in this scenario.

Equity investors will get paid until the OC test on the single-B class is breached; thereafter they don't receive any payment until 2022, when defaults start decreasing (as even in this scenario, there is some residual value left). The cumulative equity distribution is 36%.

This sample deal is only one of many in the market at the moment and the resilience to severe events will be also driven by the performance of each CLO manager. Contrary to popular belief, the pre-crisis vintages performed relatively well during the financial crisis, with low credit losses compared to high yield credit. Stricter regulation, cleaner portfolios, lower leverage, higher coverage cushions and prudent management should make this sector more resilient and an attractive investment.

12 January 2018 11:58:40
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Market moves
Structured Finance
Market moves - 12 January

Acrisure is set to acquire 100% of Beach & Associates equity from the firm's existing shareholders, which include Aquiline Capital Partners and Beach management. Under new ownership, Beach will retain its name and continue to operate as an independent advisory and transactional broking business within Acrisure. The existing Beach management team will remain following the transaction and have elected to become shareholders in Acrisure upon completion. Subject to regulatory approvals, the transaction is anticipated to complete in 1Q18.

Situs has entered into a definitive agreement to acquire MountainView Financial Solutions, with the aim of extending its existing analytics offerings. The transaction, which is subject to customary closing conditions, is expected to be completed by 31 January. MountainView's professionals will work alongside Situs to deliver a spectrum of risk management and transaction services, as well as build on the group's foundation of valuation and regulatory advisory services.

Blockchain trade

Lombard Odier Investment Managers has disclosed that it purchased the US$15m Dom Re ILS bond on the secondary market last month (SCI 8 December 2018). The firm acquired the securities for its LO Insurance Linked Opportunities Fund via blockchain delivery-versus-payment settlement from Solidum Partners. Solidum initially issued the bonds in August 2017 using a private blockchain to participants on an invitation-only basis.


Ince & Co has promoted Aymeric de Tapol, who joined the law firm in 2008 and has also spent two years in Hong Kong, to partner in its Paris office. His practice focuses on structured financings in the maritime and aviation industries under English and French law. His work with shipowners and banks touches on all aspects of structure finance deals, tax leases and export credit financings. Ince & Co now has 11 partners in France.

Investcorp Credit Management (ICM) has named Phil Yeates as md, leading its newly-created European credit funds business. He will be based in London and oversee the structuring and fundraising for closed ended credit funds and separately managed accounts in Europe, reporting to ICM head Jeremy Ghose. Yeates joins the firm following 24 years at Rothschild, where he helped establish its global credit management business.

LGIM Real Assets has made three senior appointments for its private credit business: Lorna Brown joins as head of real estate debt EMEA, having previously been md at Blackstone Real Estate; Stuart Hitchcock joins as senior portfolio manager, having previously been md at New York Life Investors; and Matthew Taylor joins as senior investment manager, corporate private debt, having previously been a director at HSBC primarily responsible for corporate securitisations. Brown and Hitchcock report to private credit head Nicholas Bamber, while Taylor reports to corporate private credit head Calum Macphail.

Ralf Ackermann has joined Searchlight Capital Partners as a partner in London. He was previously a partner at Apollo Management, where he oversaw the illiquid opportunistic credit business in Europe and served on the global illiquid opportunistic credit investment committee and the firm's European management committee. While at Apollo, Ackermann focused on a wide range of restructuring and distressed investments.

Bracewell has announced made Jeris Brunette a partner, effective 1 January, 2018. Brunette began her legal career at Bracewell and has a range of structured finance experience, particularly advising on receivables financing and securitisation arrangements.

ILS syndicate management

AXIS Capital Holdings has established a single managing agent structure for its operations at Lloyd's, after receiving authorisation for AXIS Managing Agency to commence management and oversight of Novae Syndicate 2007 and SPS 6129 – a Lloyd's special purpose syndicate launched in January 2016 as a collaboration between Novae and ILS fund manager Securis Investment Partners. Novae Syndicate 2007 and SPS 6129 will operate alongside AXIS Syndicate 1686, which AXIS Managing Agency currently manages. AXIS has initiated plans to consolidate its Lloyd's business into AXIS Syndicate 1686, under management of AXIS Managing Agency, and anticipates completing that process from 1 January 2019.

North America

Alcentra has appointed Leland Hart as md and head of US loans and high yield, reporting to global co-cio Vijay Rajguru. Leland will lead the firm's investment and research team located in New York and Boston. He joins from BlackRock Asset Management, where he was an md, head of loans and CLOs, and co-head of the global infrastructure debt group.

Blackstone has named Chris Blunt as a senior md and ceo of its new insurance solutions business, which partners with insurers to deliver customisable and diversified portfolios of Blackstone products across asset classes, as well as the option for full management of insurance companies' investment portfolios. Affiliates of Blackstone recently entered into an investment agreement with Fidelity & Guaranty Life, whereby Blackstone Insurance Solutions oversees US$22bn in assets under management. In addition, Blackstone in partnership with AXIS Capital established Harrington Reinsurance in July 2016 and currently manages all general account assets. Blunt joins Blackstone after 13 years at New York Life, where he most recently served as president of the investments group, responsible for five businesses – NYL Investors, New York Life Investment Management (NYLIM), Retail Annuities, Institutional Annuities and Seguros Monterrey New York Life – with combined AUM of more than US$500bn.

ICG has appointed Amy Schioldager as a non-executive director with effect from 25 January, marking the firm's first US-based non-executive director, reporting to chairman Kevin Parry. Schioldager recently retired from BlackRock, where she was a member of the global executive committee and head of beta strategies, having worked at the firm for over 25 years. ICG's US team numbers over 40 professionals and the firm plans to extend its proven fund vintages, as well as introduce new fund strategies across the region.

Michael Szymanski has tendered his resignation as ceo, president and a director of ZAIS Group Holdings (ZGH), in light of the company's decision to pursue discussions with Christian Zugel that would result in taking it private through a proposed cash merger. The ZGH board has elected former DBRS Group president and ceo Daniel Curry to succeed Szymanski in the vacant positions, effective from 8 January 2018. Curry is also a member of Z Acquisition, the entity formed by Zugel for the purposes of his offer to take ZGH private. Discussions between Zugel and the special committee of the ZGH board are continuing.

Renovate America has promoted Adam Garfinkle to cfo. Garfinkle joined the firm in 2015 as svp and head of capital markets and was previously head of the asset backed and mortgage backed structured finance group at Bank of America Securities. Craig Braun now assumes the role of svp and head of capital markets, having been md of capital markets at Renovate America since 2014.

Chapman and Cutler has hired Samuel Yoo as a partner to its CLO and structured finance practice in New York. Yoo was previously director and counsel at Credit Suisse Securities where he was the primary lawyer for the CLO new issue desk in New York.

A new alternative investment firm dubbed Hunter Street Partners has launched in the US which will invest in opportunistic credit and equity deals for middle market companies including specialty finance and real estate projects. The firm is led by Neal Johnson, who spent nearly a decade at Varde Partners before serving as managing partner and co-cio of Isles Ranch Partners. In addition to Varde, Hunter Street's partners come from Merced Capital, CarVal Investments, Whitebox Advisors and Pine River Capital Management. Other partners include Peter Hommeyer, president; Andrew Platt, Investments; and Jason Hegrenes, coo and cfo. Based in Minneapolis, Hunter Street will seek out idiosyncratic and off-the-run investments that have complex capital structures and companies that don't have access to traditional bank financing.

Tender invitation

Clifden IOM No. 1 has launched an invitation to the holders of circa £2bn bonds issued by 17 RMAC non-conforming RMBS to tender their notes for purchase for cash, stating that it already holds significant positions in each of the series. A fixed purchase price of 92% to 103% per £1,000/€1,000/US$1,000, as applicable, in principal amount is being offered and there is an early tender premium of 1%. The early tender deadline is 26 January, while the offer expires on 7 March and settlement is scheduled for 12 March. An investor notice last month indicated that Paratus AMC is considering redeeming the notes.



12 January 2018 11:02:50
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