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SCI Start the Week - 21 June

Category: ABS Capital Relief Trades CLOs

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A review of securitisation activity over the past seven days

Last week's stories
AutoNoria returns
BNP Paribas draws crowd
Counting Calabria
The Supreme Court decision on the FHFA is eagerly awaited
NPL ABS return
Government guarantees dominate 2020 NPE activity
Pricing flurry
European ABS/MBS market update
Smoother transition?
US CLO secondary looks to be taking this quarter-end in its stride
Super narrow Arch prices
New Bellemeade comes at spreads well inside previous CRT trade
Triple-starred first for BMO
BMO brings innovative C$ CRT trade referencing Canadian CRE
Financing football
James Paul, head of sport at Blackstar Capital, discusses how structured finance is playing a pivotal role in sport's recovery post-coronavirus

Q: Which sports are you seeing structured financing in?
A: In Europe, football is the most mature sport commercially and hence attracts most of the opportunities for structured debt financing. That isn't to say that there aren't things done in other sports, particularly on the equity side, but it's certainly much more opportunistic.

The impact of the pandemic has essentially created three tiers in sport financing. The first tier is football, where most top-tier clubs and leagues make enough money to sort themselves out one way or another.

The second tier is comprised of sports which require assistance from the government to cover losses but which have sufficient financial resources to be able to repay that assistance over time, such as Rugby Union. Finally, the third tier consists of sports that don't have the financial ability to recover the revenue they have lost and hence require outright government grant funding in order to continue. 

Q: Why is structured financing predominantly private in sports deals?
A: The majority of sport deals are private, as for the most part sporting clubs - especially football - don't like to be a headline, particularly on the subject of something financial. Football and sport are topics which provoke emotional reactions from fans and outside observers and the general tendency is to believe that basic concepts, such as debt, are either bad or to be feared.

Q: How are the deals typically structured and executed?
A: The most common method of financing in European sport is to purchase future contracted cashflows due to a club or league - for example, broadcast receivables - via an SPV, which then collects the receipts over time in its own bank account and distributes the proceeds to repay the lender.

Q: Do you expect issuance in this sector to pick up?
A: I think historically sports deals are kept as quiet as possible for the reasons discussed previously, so I don't see that intention changing any time soon. That said, I think especially now - when the deals are becoming higher profile, for example - there's a lot more noise about league-wide financings than I can ever remember in the past, due to a natural curiosity about how clubs and leagues are going to cover the cost of the pandemic. There's more digging being done from the outside, which may result in more public announcements.

Q: What is driving activity in the sector?
A: In football, in particular, there are two types of financing: transfer financing and general financing. I think there is a focus on general financing right now, as a result of the pandemic, as obviously clubs and leagues want to shore up their balance sheets following the hits they've taken over the past 18 months or so.

As we return to normality, I'd expect to see a shift back toward transfer financing, as the vast majority of clubs require a healthy transfer market in order to execute their preferred financial strategies. For example, training young players through academies and selling at higher valuations later, or buying more established players for larger sums and using those places to win titles.

Angela Sharda

Other deal-related news

  • Accelerated dealer auto inventory turnover has resulted in insufficient collateral available for US dealer floorplan ABS master trusts in 2021, Fitch reports (SCI 14 June).
  • The average estimated CO2 emissions at closing for German auto ABS portfolios have decreased by about 6% for issuances in 2021, compared with deals from the 2019 vintage, according to Fitch (SCI 14 June).
  • Moody's has affirmed the ratings of 14 notes issued by the Domi 2020-1 and 2020-2 Dutch buy-to-let RMBS, following the correction of an error (SCI 14 June).
  • Most high investment-grade rated US CMBS bonds are able to withstand downgrades under a hypothetical stress test conducted by Fitch (SCI 14 June).
  • SGR-CESGAR, the Spanish guarantee society association, has launched a pioneering securitisation fund that aims to provide Spanish SMEs with access to the capital markets (SCI 15 June).
  • The SFA has responded to the US SEC's RFC on climate change disclosures with recommendations that it believes would facilitate a clear, consistent and standardised framework in connection with public securitisations over the next 18-24 months (SCI 15 June).
  • The non-performing exposure (NPE) ratio in Cyprus stood at 17.7% in December 2020, declining by almost 10 percentage points from 28% in December 2019, according to DBRS Morningstar figures (SCI 15 June).
  • Piraeus Financial Holdings has reached definitive agreements with Intrum and Serengeti Asset Management in connection with the sale of 49% and 2% respectively of the mezzanine and junior notes of the Sunrise I non-performing exposures portfolio (SCI 16 June).
  • Moody's Analytics has integrated CMBS loan-level data across its commercial real estate solutions (SCI 16 June).
  • Apollo Global Management has committed to invest up to US$500m in senior secured credit facilities originated by Victory Park Capital (SCI 16 June).
  • Panagram Structured Asset Management, an Eldridge-backed RIA specialising in structured credit, has launched with approximately US$13.5bn in assets under management (SCI 16 June).
  • Scope Ratings has affirmed its single-A rating on the class C credit-linked notes issued by SSPAIN 2019-A and upgraded the class D to F notes to triple-B plus, triple-B minus and double-B plus respectively from triple-B minus, double-B and double-B minus (SCI 18 June).

Company and people moves

  • Luca Giancola has joined Cairn Capital to lead the repositioning of its private structured credit business, which will continue to play an important role in the firm's growth within a broader credit opportunity offering (SCI 14 June).
  • RBS International has appointed Neal King as senior director, to oversee new business from NatWest's Trustee and Depositary Services traditional fund management clients (SCI 14 June).
  • The bankruptcy court has confirmed Hertz Global Holdings' plan of reorganization, clearing the way for Hertz to emerge from Chapter 11 by end-June (SCI 14 June).
  • KKR has launched AV AirFinance, a global commercial aviation loan servicer (SCI 15 June).
  • HIG Capital has expanded its European WhiteHorse team with the addition of Sebastian Lorenz as principal and head of the DACH region (SCI 15 June).
  • HSBC Asset Management is consolidating its alternative assets operations into a single unit, HSBC Alternatives, managing and advising US$53bn (SCI 18 June).
  • BlueBay has appointed Michael Wolfram as head of institutional sales for Germany and Austria, based in Munich (SCI 18 June).
  • White & Case has appointed structured finance partner Ingrid York as co-head of its financial institutions industry group (SCI 18 June).


Recent research to download
Synthetic Excess Spread - May 2021
TCBI Deal Profile - May 2021

CLO Case Study - Spring 2021

Upcoming events
SCI's 1st Annual CLO Special Opportunities Seminar
29 June 2021, Virtual Event
SCI's 3rd Annual NPL Securitisation Seminar
September 2021, Virtual Event
SCI's 7th Capital Relief Trades Seminar
13 October 2021, In Person Event