Sector developments and company hires

Rising interest rates and widening spreads have spurred changes in US non-prime RMBS structures that introduce investor-friendly features for senior noteholders, Fitch reports. The move comes amid growing concern over coupon cap shortfalls and lower availability of excess spread.

As such, many issuers have reduced the aggregate servicing fee to 25bp (which historically has been 50bp), while some have introduced straight sequential waterfalls rather than modified pro-rata/sequential waterfalls. Other structural changes reduce or reallocate the interest of the subordinate and risk retention bonds. These include issuing subordinate bonds as principal-only bonds, reducing the subordinate bond coupons to coincide with the senior note step-up coupon and changing transaction waterfalls to reallocate subordinate interest to pay class A1 cap carry-over amounts.

In other news….

EMEA

Arrow Global has appointed a new director of asset management to its Irish servicing business, Mars Capital Finance. Seamus Corbett joins the Dublin-based Mars Capital from BCM Global where he held a similar role, and having previously worked at IBRC, Anglo Irish Bank, Woodchester, and EBS Building Society. Corbett brings more than two decades of experience to his new role as director of asset management, in which he will be concentrating on maintaining the Mars Capital reputation and enabling consistency across existing asset management portfolios.

GLAS has received strategic investment from Levine Leichtman Capital Partners in a move to support the firm’s rapid growth. The London-based independent institutional debt administration services provider, GLAS, increased its revenue by more than 25% and total headcount by over 40% from 2020 to 2021. The firm hopes the investment will help support the development of its technological capabilities and development of bespoke solutions for deal parties in complex transactions. GLAS will continue to be led by its co-founders, Mia Drennan and Brian Carne, as group president and general counsel, respectively. The investment was supported by Lincoln International serving as financial advisor and Addleshaw Goddard acting as legal advisor to GLAS, and the terms of the transaction were not disclosed.

illimity Bank has acquired Aurora Recovery Capital (Arec), a special servicer of securitised mid- and large-ticket unlikely-to-pay (UTP) corporate real estate loans. With offices in Rome and Milan, the firm has €2.1bn third-party assets under management and an average gross book value (GBV) of single positions of circa €30m. Arec is currently owned by Finance Roma, GWM Group Holding (each holding a 40% stake) and Oxalis Holding. The firm ended 2021 with an EBITDA of €3.1m and has a team of around 40 professionals, with specialist skills ranging from managing insolvency procedures and distressed credit restructuring processes to running and turning around complex property estates.

LATAM

Vinci Partners has announced the launch of Vinci Credit Securities, in a move to further develop the company. The fund will centre itself on generating income for quotaholders through a diversified portfolio of MBS and investing in like-minded REITs. As the first perpetual capital listed REIT within MBS and debt-rated securities managed by the firm, the fund has added to initial seed investment to reach R$177m in AUM. The company has now launched seven listed vehicles worth up to R$5.3bn in perpetual capital across real estate, infrastructure, and credit segments.

North America

Advent Capital Management has launched its debut CLO platform through a partnership with and seed capital from Apollo. The new CLO business works to extend Advent’s existing credit underwriting, structuring and leveraged loan services and expertise. Sharing a credit-first philosophy with Apollo, Advent seeks to build upon its disciplined investment and portfolio management approach and offer investors attractive risk-adjusted returns via income and capital appreciation. Advent expects proceeds from the partnership with Apollo to offer both seed equity and debt capital for a series of Advent-managed CLOs.

Mt Logan Re welcomes Youssef Sfaif to its team as coo. Effective from 1 July 2022, Sfaif will join the Everest Re Group’s third-party capital unit amid crucial period of company expansion. Sfaif will report directly to Mt Logan Re president, John Modin, and will help support the firm’s continued expansion of its capital base and bench of offerings. Sfaif joins the firm from PGGM, where he has served as a director in its credit and insurance-linked investment teams since 2017, and brings to the firm expertise in capital markets, reinsurance convergence, and extensive experience in originating, structuring, and executing across different (re)insurance risk-sharing transactions.