A review of securitisation activity over the past seven days

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Last week's stories
Consumer SRT prints
Santander finalises capital relief trade
Faster Fannie, faster
GSEs grew appreciably in 2020 and can now retain earnings
Forgive and forget
Student loan forgiveness heralds widespread prepayment in student loan ABS, but is credit positive
Growing trend
Third-party CRT arrangers gaining traction
NDBI risk eyed
Economic resilience bonds in the works
Refi surge
Spread compression drives wave of CLO refinancings
Seasonal effects
Servicer boost for Italian NPL collections
Private role?
Benefits of tokenisation weighed
As investment trends shift more towards private financings, tokenisation could play an important role in facilitating transactions. However, obstacles remain to a more widespread adoption of blockchain technology.
"A small revolution is going on that could significantly improve the investment process in the private industry, in particular. As the focus is shifting from public financing to private financing, tokenisation could facilitate transactions in currently highly illiquid assets," says Stéphane Blanchoz, head of SME alternative financing at BNP Paribas Asset Management.

He continues: "The tokens - digital assets - could represent loans that are complimentary to bank financing, providing additional financing possibilities for borrowers and transparent opportunities for investors. The process would also save time for investors involved in direct lending, where lots of private information needs to be digested before making an investment case."

Indeed, blockchain technology has a number of advantages. For example, if standardised, there would be cost benefits for borrowers.

"It is faster, cheaper, better integrity of data and a shared system of records. There are some small steps that can be taken with some underlying information managed using DLT, culminating with the actual assets being truly digital, not just a pdf, which is the real opportunity for innovation," says Charlie Moore, ceo of Acorn Labs.

He adds: "There is a degree of confidence when able to look at the same updates across all deal parties. It is a simple way of using DLT as a database as an initial entry point. Parties should not care about the exact underlying database technology."

There are various challenges involved in the utilisation of tokenisation, however. For example, the need to modify all of the components in the blockchain is likely to be time consuming and standardised formats would be required.

"Loans are, for instance, complex instruments, often requiring different covenants to closely monitor and mitigate risks. It would probably be a challenge to track all these tailor-made features in a blockchain," notes Blanchoz.

In any given transaction, multiple parties are involved and part of the challenge is to get all of them comfortable with change. "It is not about an individual company; it is about the industry adopting it. I do not think much of the traditional structured credit market will move into this space any time soon," says Moore.

He concludes: "There are some new Silicon Valley players which help to access capital in emerging asset classes using private markets. They may demonstrate the full potential of digital receivables and start to look at tokenisation of these asset in the next 12 to 18 months. Legacy companies in the securitisation ecosystem will need to think about how to avoid being cut out of that equation and stay competitive."

Jasleen Mann

Other deal-related news

• MBIA Insurance Corporation has entered into an agreement to settle the litigation it filed in 2009 against Credit Suisse and certain affiliated entities (SCI 15 February).
• A new Bank of England Staff Working Paper, entitled 'Banks, shadow banks and business cycles', presents a theory that links investor sentiment to credit spreads via the non-bank financial sector (SCI 16 February).
• JPMorgan Chase Bank is prepping the debut CLN issuance from the JPMorgan Wealth Management Mortgage platform to transfer credit risk to noteholders through a hypothetical tranched CDS on a reference pool of mortgages (SCI 17 February).
• The US SEC has filed a civil action alleging that Morningstar Credit Ratings violated disclosure and internal controls provisions of the federal securities laws in rating CMBS (SCI 17 February).
• Starwood Capital is in the market with its first single-family rental securitisation (SCI 17 February).
• Together Commercial Financial Services is marketing an unusual securitisation backed by small balance commercial assets (SCI 19 February).

Company and people moves

• DLA Piper has hired Jay Williams as a partner in its structured finance practice, based in New York (SCI 15 February).
• Maritime and offshore alternative capital provider Fleetscape Capital has entered into an innovative financing structure with Macquarie that provides a more efficient offer to vessel owners seeking higher leverage situations (SCI 16 February).
• SCOR has promoted Peter Nowell from global head of structuring - financial solutions to global head of financial solutions (SCI 16 February).
• Michel Büker has joined Willis Re in a dual role as head of Lloyd's capital, Willis Re Specialty and head of production, customised solutions, EMEA (SCI 16 February).
• Allen & Overy has appointed Jake Mincemoyer as partner and head of its US leveraged finance practice, based in New York (SCI 16 February).
• Richard Barrent has joined Compass Mortgage as svp - special projects (SCI 16 February).
• Eagle Point Credit Management has recruited Seth Weinstein as director of business development, a newly created position where he'll be responsible for strengthening the firm's existing relationships in the institutional investment community (SCI 16 February).
• Nuveen is set to acquire Greenworks Lending, a C-PACE financing provider (SCI 17 February).
• NPL Markets has strengthened its advisory board and management team, as the company embraces new opportunities in the burgeoning illiquid and distressed loan market (SCI 17 February).
• Jeff Pirhalla has joined Greystone as a director for the firm's agency lending platform, focusing on bank correspondent and lending relationships intended to drive volume for Greystone's small loans and overall agency lending platforms (SCI 17 February).
• Sabal Capital Partners has added 14 new hires to support its strategic growth as a provider of a comprehensive range of multifamily and commercial real estate debt solutions (SCI 17 February).
• The EBRD is providing US$100m in new funds to Denizbank to finance Turkish companies' investments in green technologies and support women-led businesses (SCI 19 February).
• American Equity Investment Life Holding Company and Adams Street Partners are forming a joint venture for co-developing insurer capital-efficient products in middle market credit, with American Equity initially committing up to US$2bn to the investment strategy (SCI 19 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 2nd Annual Middle Market CLO Seminar
25 February 2021, Virtual Event
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