A review of securitisation activity over the past seven days

Last week's stories
Democratising access
Debut Indian wealth-tech bond repaid
Morgan mulled
Latest JP Morgan CRT trade cited as fresh evidence of US take-off
Pandemic uplift
Covid-19 boosts NPL note sales
Record fundraising
Chorus exceeds SRT fund targets
Strong pipeline
European ABS market update
Supply issues
STS volumes concentrated in auto loans
Through thick and thin
JPMorgan set to price its new CRT at wafer thin margins
US CLOs stay strong
Resets active as participants also address other issues
Galaxy securitisation finalised
Alpha and Davidson Kempner sign deal

Alpha Bank has signed a definitive agreement with Davidson Kempner with respect to its €10.8bn Galaxy portfolio (SCI 24 November 2020). The deal is the second largest rated non-performing loan securitisation in Europe and will reduce the lender's NPE and NPL ratio in Greece by 24% and 13% respectively.

According to the terms of the transaction, Alpha Bank will sell 51% of the mezzanine and junior tranches to an entity managed by Davidson Kempner for a consideration payable in cash. The total proceeds for Alpha Bank - including the senior notes and the sale price of the mezzanine and junior tranches - correspond to approximately 35% of the total gross book value of the portfolio.

The Greek lender will retain 5% of the mezzanine and junior notes - in line with risk retention rules - and intends to distribute 44% of the remaining notes to shareholders, subject to regulatory and corporate approvals.

The agreement also stipulates the sale of 80% of Alpha's loan servicing subsidiary Cepal Holdings. The bank will then enter into an exclusive long-term servicing agreement with the newly acquired entity for the management of its existing €8.9bn retail and wholesale non-performing exposures in Greece, as well as any future flows of similar assets and early collections. The practice of selling servicing platforms to third-party investors is common in the European NPL market, since investors can provide expertise and permits them to maximise recoveries.  

The servicing agreement will last for 13 years, with a right to extend. The new entity will manage €10.8bn of exposures from the Galaxy portfolio and a €4.6bn portfolio from third-party investors. The enterprise value of the new Cepal is valued at €267m, with the bank benefiting from a further upside through an earn-out of up to €68m linked to the achievement of certain targets.

The consideration includes a contingent element of up to €17m if the transaction is on a levered basis. The bank, acting as an arranger of a financing syndicate, has agreed with Davidson Kemper on the key terms of a long-term funding facility of up to €120m, which may be drawn at the sole discretion of Davidson Kempner. 

The transaction is expected to close in 2Q21, subject to all applicable corporate, regulatory and governmental approvals. Deutsche Bank and Alantra acted as joint lead arrangers on the deal.   

Stelios Papadopoulos

Other deal-related news

• AIB Group is set to sell a non-performing loan portfolio in long-term default to Mars Capital Finance Ireland as part of a consortium arrangement with Mars and affiliates of Apollo Global Management (SCI 22 February).
• The CFPB is considering whether to initiate a rulemaking to revisit the Seasoned QM Final Rule (SCI 24 February).
• Polis Fondi has launched an Italian multi-compartment closed-end mutual fund, with the aim of investing €2.5bn GBV in non-performing and unlikely-to-pay loans (SCI 24 February).
• Bank of America has preplaced another European CMBS, following significant demand for its UK last-mile logistics transaction (SCI 24 February). Golub Capital Partners, one of 17 partner managers in the Dyal Capital Partners IV fund, has brought a lawsuit against the fund, Neuberger Berman Group and NB Alternatives Advisers, seeking an injunction against the Blue Owl transaction (SCI 25 February).
• Geolocation data provider Advan Research Corporation has launched a CMBS foot traffic counts product (SCI 25 February).
• Citi has preplaced a pair of UK non-conforming RMBS backed by a portfolio it acquired from UKAR (SCI 26 February).
• Judo Bank is in the market with its debut securitisation (SCI 26 February).

Company and people moves

• Churchill Asset Management has announced a swathe of promotions across its senior lending and junior capital and private equity solutions investment teams, as well as its investor relations and operations departments, effective from 1 March (SCI 22 February).
• Schroders has expanded its securitised credit team with the appointment of a senior portfolio manager in a newly created role, bolstering its management of assets in the CLO market and underlying syndicated corporate loans (SCI 22 February).
• European consumer credit platform auxmoney has appointed Boudewijn Dierick md of auxmoney Investments, a newly established investment arm of the company based in Dublin (SCI 23 February).
• AlbaCore Capital Group has strengthened its team with a number of new appointments to support the growth of the firm and new investment strategies (SCI 23 February).
• Tikehau Capital has recruited Christoph Zens as head of its CLO business, based in London (SCI 23 February).
• Strategic Risk Solutions has appointed Anna Pereira to the newly-created position of svp, ILS, based in its Bermuda office (SCI 23 February).
• Aon has hired Marcus Foley to the Bermuda operations of Reinsurance Solutions, subject to Bermuda immigration approval, and Tim Radford to its London capital advisory team within Reinsurance Solutions (SCI 24 February).
• Teresa Bryce Bazemore, an independent member of the Chimera Investment Corporation board, has notified the company that she will resign effective as of 28 February (SCI 24 February).
• OptiAssets and Privatam have formed a joint venture designed to allow asset and wealth managers better access to securitisation services and securitised assets (SCI 24 February).
• Hildene Capital Management has nominated two director candidates for election to the CIB Marine Bancshares board, in connection with the company's 2021 annual shareholder meeting (SCI 25 February).
• Briarcliffe Credit Partners, a placement agency fully dedicated to private credit, has launched (SCI 25 February).
• HIG Capital has expanded its European WhiteHorse direct lending team with the hiring of Ignacio Blasco as md (SCI 26 February).
• Latham & Watkins has elected 19 counsel to its partnership, effective 1 March (SCI 26 February).

Data

Recent research to download
Greek CRTs - January 2021
Insurer Involvement in SRT - December 2020
CLO Case Study - Autumn 2020

Upcoming events
SCI's 5th Annual Risk Transfer & Synthetics Seminar
21-22 April 2021, Virtual Event
SCI's 3rd Annual NPL Securitisation Seminar
26 May 2021, Virtual Event
SCI's 1st Annual CLO Special Opportunities Seminar
29 June 2021, Virtual Event