Contents

NPLs

Bank acquisition trend continues

HSH Nordbank has been sold for €1bn to JC Flowers and Cerberus. The agreement is accompanied by a sale of predominantly shipping non-performing loans to an acquisition vehicle of Cerberus and JC Flowers, as well as minority owners GoldenTree Asset Management and Centaurus Capital. The sale reflects an investment trend, whereby private equity investors acquire distressed financial institutions rather NPL portfolios.

"This is a pan-European trend," says Denise Hamer, partner at Trace Capital Advisors. "It involves selling NPL portfolios alongside internal restructuring teams as an entire platform to PE funds."

She continues: "European regulators are looking at what is called the Canadian model, where you have a few systemic, well capitalised banks that don't compete on pricing. This entails consolidation, which means selling non-core assets."

Once the funds buy the platforms, they service and/or liquidate the assets. "They have sophisticated fixed-cost servicing platforms that they need to feed," Hamer notes. The acquired leasing, factoring and repo platforms are then merged into a single service that the banks outsource to.

The same 'lean and mean' model seems to be reflected in the HSH Nordbank case. Tom McAleese, md at Alvarez and Marsal, says: "It is our understanding that the new owners of HSH Nordbank propose to change the business strategy and operating model into a specialty project finance bank, while further reducing balance sheet size and location footprint, as part of their value creation strategy."

Austrian bank BAWAG is another case in point. The lender was acquired by Cerberus in 2006 and was bailed out in the same year, after being sued by creditors of collapsed US futures house Refco, one of its affiliates. In an October turnaround, the bank listed its first IPO in a decade at €1.9bn, Austria's biggest-ever listing.

Lone Star's acquisition of Portuguese bank Novo Banco is another manifestation of the trend, but also an example of the challenges that accompany such acquisitions. "In the Novo Banco case, some of the loans will be sold to third-party servicers, while others will be serviced internally. The difficulty comes with the bank's restructuring," says veteran investor Joao Costa Reis.

In particular, investors might have to deal with local impediments, such as inflexible labour or tax laws that can deter a bank from auctioning its REOs. Investment horizons can also be quite long, spanning up to seven or more years, a stark contrast with the three-year period that is typical of NPL portfolio purchases.

The 28 February deadline for HSH Nordbank to be sold or wound down was set by the European Commission, following a €13bn government bailout in 2009. Given that it is now relieved of its legacy NPLs, the non-core bank will cease to exist, which means the guarantee of Hamburg and Schleswig-Holstein will be fully terminated after the closing of the transaction.

The carve-out of the portfolio improves the credit quality of the new bank. The NPE ratio is expected to fall to under 2%, compared with 11.7% as of end September 2017, which is satisfactory by European standards. Furthermore, the shipping portfolio will only make up around 8% of the balance sheet.

However, the agreement remains subject to various approval procedures, including approvals from the European Commission and the state parliaments of Hamburg and Schleswig-Holstein. Subject to this, the closing of the transaction is expected to occur in the second or third quarter of 2018.

SP

RMBS

Landmark sukuk could be first of many

The inaugural UK sharia-compliant RMBS recently closed, marking the start of a new asset class in the jurisdiction. Al Rayan Bank's £250m Tolkien Funding Sukuk No.1 (SCI 29 January) signals a high point for the growth and acceptance of Islamic finance in the UK and could be the first of many such securitisations, across a range of assets.

Moody's and S&P assigned Aaa/AAA ratings to the deal's sole £250m class A note. Pricing on the transaction came in at three-month Libor plus 80bp on the profit rate and plus 160bp on the step-up profit rate.

Amir Firdaus, treasurer at Al Rayan, comments that the bank favoured securitisation as a cost-effective way of boosting its growth - which has seen the bank grow fivefold in the last five years - and as a way of diversifying its funding options. Additionally, while Al Rayan hasn't been able to utilise the TFS due to lack of sharia-compliance, Firdaus says that the bank wanted to tap the RMBS market before more banks return to it and pricing becomes more competitive.

As with any new asset class, significant homework, preparation and investor education was required. Firdaus explains: "We wanted to gain widespread acceptance for the asset class from conventional RMBS investors, as well as sukuk investors, which we achieved. We did a fair bit of homework in educating them about sukuk transactions and gauged what they needed to feel comfortable with the deal."

"Part of this," he continues, "was spent explaining how the transaction is regulated under UK law and the similarities between this deal and conventional RMBS. After this education process, they were keen to get on board."

Along with Al Rayan, Standard Chartered was co-lead manager on the deal. Spencer Maclean, the firm's md, head of capital markets, Europe and Americas, adds that "the structure of the transaction doesn't differ hugely from traditional RMBS, with a fairly straightforward and not too complex structure, so investors haven't been deterred in that way."

As a result, the majority of investors in the deal - 97% - were conventional and UK-based, including banks and fund managers. The remainder were Islamic banks and funds. A challenge with the latter investors was explaining the mechanics of RMBS, as they lacked any experience with the product.

In terms of pricing, Firdaus says there was a "considerable premium" on the transaction of around 40bp - double that of the recent Nationwide RMBS. He adds, however, that this was not a surprise, having expected to pay 20bp on being a first-time issuer and another 20bp on the unusual collateral (sharia-compliant HPP contracts).

Al Rayan is hopeful for tighter pricing on follow-up transactions. This is supported by reports of the notes already trading at around 70bp, suggesting the market is already gaining comfort with the asset class.

Looking ahead, Firdaus is clear that he does not view the firm as a "one trick pony" and hopes to follow up this transaction with further transactions, not only in the residential mortgage space. The bank has large buy-to-let and HPP asset books, with the potential for securitisation, and there is also the possibility of a CMBS further down the line, he says.

Equally, while RMBS is a cost-effective funding tool at the moment for the bank, should this change Al Rayan may turn to other funding methods. With the bank's relatively new Aa3 rating from Moody's, it is able to issue covered bonds, for example, if the economics suit.

Maclean concurs that the economics at the time made securitisation the cheapest funding source for the bank. He adds that it also helps the bank meet the growing demand for its sharia-compliant finance products, which may well feed into further issuance of sukuk securitisations.

He says: "Overall, growing origination volumes of sharia-compliant collateral on the retail side will likely feed into further, similar transactions. Furthermore, you can potentially get sharia-compliant securitisations backed by any collateral. It is certainly possible to do a sharia-compliant auto ABS, for example, but it would just be a question of structuring it appropriately - but certainly such structures are already out there."

While the transaction was able to achieve a triple-A rating, it did come with the concession of greater credit enhancement than on a conventional RMBS. One reason for this, according to Firdaus, is that the rating agencies typically use average loss numbers as a key metric. But because Al Rayan has not had any recorded losses, it was effectively penalised.

Furthermore, the transaction may also have been penalised for having a single-tranche structure and because it doesn't feature a sharia-compliant profit rate swap. Addressing these shortcomings would provide further investor protection.

However, subordination through tranching is not sharia-compliant and, while it can be done, it would have increased the complexity of the transaction. A profit rate swap would also have increased complexity - something Al Rayan wanted to avoid for a first-time issue and being wary of deterring conventional RMBS investors. They may feature in future deals with growing comfort around the asset class.

Not only does this landmark transaction highlight growing appetite for sharia-compliant financial products in the UK, it also signifies the development of Islamic finance and growing acceptance among the wider investment community. Firdaus comments that the RMBS was helped by the UK's supportive approach to Islamic finance, which has created a "great environment for its growth and development."

He adds too that - by structuring the deal in the UK - it is protected from the possibility of a Dana Gas scenario, something investors raised concerns about. He concludes: "A repeat of the Dana Gas scenario is not possible with this transaction...one reason being it is regulated under UK law, which Dana Gas wasn't, and the other is that there are protections in place through the RMBS structure."

RB

Secondary markets

Euro secondary slows

January's optimism has faded throughout February as activity across the European securitisation secondary market has slowed.

"There's not a great deal going on with a combination of factors such as a busy primary, holidays, Vegas and some bad weather keeping things pretty quiet," says one trader. "However, we have seen a couple of bid lists recently, which appear to have traded pretty well and there are some indications of improving off-BWIC activity."

The market has also been hit by macro volatility, but the trader suggests impact has been limited. "The jolt at the beginning of the month put us on warning. At the time, higher beta ABS/MBS widened significantly, but has since come back and recouped most of its losses. Meanwhile, CLOs, particularly single-As to triple-Bs, are softer but it's nothing drastic."

There are currently no BWICs on the European securitisation secondary market schedule for today.

Secondary markets

US CLOs steady

The US CLO secondary market appears to be holding steady as participants consider their next move.

"Superficially it looks like the long-standing pattern in the market will hold, but it feels to me like changes are afoot following the return from Vegas," says one trader. "There's no obvious single driver and I'm not sure there's even a consensus in the market, but people are digesting a lot of new information and could ultimately decide to act on it."

Much of that information was discussed extensively at the conference, the trader reports. "There were many conversations around the US tax reforms, which could benefit the consumer but adversely impact high yield or fixed income more broadly; how the triple-A curve has flattened; the knock-on effects of broader market volatility; and, of course, the end of risk retention, which not least will mean that if that change stays in place marginal issuers will start to issue, further boosting primary."

At the beginning of the month primary CLO issuance was the secondary market's chief concern, the trader says. "Following spread tightening in January, new issue congestion in the first couple of weeks of February led to secondary starting to soften and we're now marginally softer still, but it's nothing major."

Indeed, the trader adds: "There is a feeling that the market is expensive right now and spreads are still relatively tight in secondary. However, while information is still being digested sideways movement is the likeliest short-term outcome."

There is currently only one BWIC on today's US CLO calendar but it is a sizeable one - $263+m across 33 double-A to single-B line items. Due at 14:00 New York time it comprises:

ALM 2012-5A ER3, ALM 2012-7X DR, ALM 2015-12A DR, ALM 2015-12A E, ALM 2015-16A E, AMMC 2013-13A B2L1, ANCHC 2013-1A DR, ECP 2014-6A C, ECP 2014-6A D1, FCO 2017-9A B, GOCAP 2014-18A CR, HLDN 2014-3A E, ICG 2014-1A DR, JFIN 2015-1A E, KHWK 2015-1A D, MCLO 2017-10A D, MHAWK 2013-1A C, OAKC 2014-10A E, OAKCL 2014-2A C, OAKCL 2014-2A D, OCP 2017-13A D, OZLMF 2013-3A CR, RRAM 2017-1A DR, SHACK 2013-4A D, SHACK 2013-4A E, TAMCO 2017-1A C, TAMCO 2017-1A D, TELOS 2014-5A D, TELOS 2014-5A E, TELOS 2014-5X D, TELOS 2014-5X E, WAMI 2014-1A D and ZCLO3 2015-3A C.

Two of the bonds have covered with a price on PriceABS in the past three months - RRAM 2017-1A DR at 102.4 and AMMC 2013-13A B2L1 at 101.82, both on 7 December.

ABS

PACE underwriting boosted

Consumer protection legislation passed in California last October will collectively strengthen PACE underwriting practices, according to Morningstar Credit Ratings. The agency views most of the requirements as credit positive for future securitised residential PACE assessments and suggests that programme administrators may adopt the new measures on a nationwide basis.

California Governor Jerry Brown signed into law both Assembly Bill 1284 and Senate Bill 242 on 4 October 2017. The new legislation gives the California Department of Business Oversight the authority to regulate PACE programme administrators, which Morningstar expects will help reinforce good business practices.

Beginning on 1 January 2019, the department will issue licenses to programme administrators, which will be required to submit semi-annual reports, including delinquencies, missed payments and defaults. The collection of this assessment information will, for the first time, offer data transparency and help identify important credit trends.

Evaluating a property owner's ability to pay is another key measure. The Department of Business Oversight will - from 1 April - determine the metrics to measure a property owner's ability to pay, which may include income, assets and current debt obligations (current eligibility is largely based on home equity).

"This more vigorous examination of a property owner's ability to pay...will likely lead to a lengthier underwriting and approval process or possibly even a decline in origination volume, as fewer property owners will qualify," Morningstar observes.

In addition, the programme administrator shall obtain oral confirmation regarding whether the property owner has received or is seeking additional PACE assessments before a property owner executes an assessment contract. Property owners currently have no statutory obligation to reveal other outstanding or intended PACE obligations.

Programme administrators may also be required to use a real-time registry or database system for tracking PACE assessments. No later than 1 January 2020, the commissioner of the Department of Business Oversight shall determine whether to proceed with a rulemaking action to require this change. If implemented, this is expected to increase transparency and allow for the collection of data for performance metrics.

Under AB 1284, PACE financing must be for less than 15% of a property's value, up to the first US$700,000, including any existing assessments. For properties valued above US$700,000, the financing will include the 15% rule, but it drops to less than 10% for the remaining value of the property above the US$700,000 threshold. Finally, total PACE assessments and mortgage-related debt on the property will not exceed 97% of the property's market value.

Meanwhile, SB 242 states that programme administrators cannot waive or defer the first payment and that a property owner's first assessment payment is due no later than a year after the installation of the efficiency improvement is completed. A property owner can cancel the contractual assessment at any time before midnight on the third business day.

Three other bills were introduced in California's Assembly and Senate this month to provide more clarity and promote further data transparency. AB 2063 proposes lengthening the document retention of information related to the PACE assessments to five years after the assessment is extinguished (from three years) and requiring the commissioner to include programme administrator reports in the annual composite reporting.

AB 2150 also seeks to include programme administrator reports on PACE assessment contracts as part of the annual composite reporting, while SB 1087 proposes requiring programme administrators to maintain their processes and practices in writing. Additionally, it requires the appraisal for a property's market value to be independent and allows the commissioner to bring an order against a party without first filing a report about the violation.

Finally, two PACE-related bills are in the works at the federal level. In November, Senator Mike Crapo introduced the Economic Growth, Regulatory Relief and Consumer Protection Act, which would empower the CFPB to study PACE transactions and possibly include PACE assessments under certain regulations related to the Truth in Lending Act. Last April, Senator Tom Cotton introduced the Protecting Americans from Credit Entanglements Act of 2017, which includes PACE assessments under certain provisions of the Truth in Lending Act.

CS

Structured Finance

SCI Start the Week - 26 February

A look at the major activity in structured finance over the past seven days

Upcoming event
SCI Risk Transfer & Synthetics Seminar - 13 March, New York
SCI's Synthetic Securitisation Seminar provides an in-depth exploration of how synthetic securitisation is being utilised to transfer risk, achieve capital relief and create bespoke investment opportunities in the post-financial crisis environment. Panels cover capital relief trade structuring and regulatory considerations, issuance trends, index tranches and mortgage credit risk transfer.

Pipeline
A mixed bag of auto loan ABS, CMBS and RMBS remained in the pipeline at the end of last week. Collateral from Australia, China and Japan gave an international flavour to the offerings.

The newly-announced auto securitisations were US$470m-equivalent OSCAR US 2018-1 and RMB2.79bn Rongteng 2018-1, while the CMBS comprised US$1.14bn FREMF 2018-K73, US$210m Natixis Commercial Mortgage Securities Trust 2018-PREZ and US$179m Natixis Commercial Mortgage Securities Trust 2018-RIVA. Firstmac Mortgage Funding Trust No.4 1-2018, La Trobe Financial Capital Markets Trust 2018-1 and US$500m PNMAC GMSR Issuer Trust Series 2018-GT1 represented the RMBS.

Pricings
ABS accounted for the majority of last week's pricings, with auto, consumer, equipment and esoteric deals all being snapped up. The other asset classes were well represented too.

The auto prints consisted of: €1.01bn A-BEST 15 (reoffer), US$1.32bn Honda Auto Receivables 2018-1 Owner Trust, US$857.7m Hyundai Auto Lease Securitization Trust 2018-A, US$1bn Nissan Auto Receivables 2018-A Owner Trust and €1bn Red & Black Auto Germany 5. The consumer deals included: US$600m OneMain Financial Issuance Trust 2018-1, US$155.56m Oportun Funding VIII Series 2018-A and US$525m World Financial Network Credit Card Master Note Trust Series 2018-A.

US$496.81m Business Jet Securities Series 2018-1, US$348.9m CAL Funding III Series 2018-1 and US$137m TLF National Tax Lien Trust 2017-1 made up the esoteric pricings, while the equipment ABS were US$197.55m Amur Equipment Finance Receivables V Series 2018-1 and US$753.19m John Deere Owner Trust 2018. The US$700m Nakama Re 2018-1 was the sole ILS print.

Newly issued CLOs consisted of: US$511.6m Flatiron CLO 2018-1, €404.75m GoldenTree Loan Management EUR CLO I, US$606.25m Hayfin Kingsland VIII, €413m Marlay Park CLO and US$517.5m Symphony CLO XIX. There were also a pair of CLO refinancings - US$370.5m Ares XXXVIII CLO and US$78m Madison Park Funding XIX.

The US$300m UBSCM 2018-NYCH and US$236m VB-S1 Issuer Series 2018-1 CMBS, together with the A$252m Sapphire XVIII Series 2018-1 Trust RMBS rounded out last week's issuance.

Editor's picks
Busy start for UK RMBS: UK RMBS has come flying out of the blocks in 2018, with the end of the Term Funding Scheme and Funding for Lending Scheme only partly explaining the new-found enthusiasm for issuance. Recent JPMorgan figures put UK RMBS issuance at over £3bn for 2018 already, with US dollar tranches and Islamic finance techniques both seen, and even the possibility of a seven-year fixed rate tranche mooted, while RIPON paper coming into secondary and the proposed RMAC call both add spice to the sector...
Indian investment boost expected: India's latest guidelines aimed at speeding up non-performing loan resolution is likely to increase banks' credit costs and undermine earnings in the near term. The new regime, however, is also expected to boost NPL investment in the country...
Synthetics spur CDS expansion: An evolving synthetic securitisation landscape is fuelling the expansion of the CDS market and CDS-linked products. However, the regulatory hurdle of the fundamental review of the trading book (FRTB) looms on the horizon...

Structured Finance

LCR amendments could be STS 'game-changer'

The European Commission's recent draft regulation on the LCR does not ensure STS securitisations are eligible as level 2A assets. Along with other factors, this could result in securitisation remaining a less attractive option compared to other financial instruments.

Ian Bell, director of the PCS, commented on the draft regulation as part of the consultation. He suggests that "leaving this asset class at level 2B undermines the chances of success of STS as a whole."

Bell recommends that STS securitisations should become eligible as 2A category assets, with the same maximum share and haircuts as CQS2 covered bonds. He adds that current level 2B securitisations should remain eligible on the same terms as under the current rules.

Rabobank credit analysts note that the most important addition, as envisaged by the draft regulation, is that HQLA-eligible securitisations should have an STS designation. Furthermore, according to the draft, the HQLA level 2B classification for eligible securitisations doesn't change, along with the current haircuts on certain securitisation exposures and the level 2B cap.

The minimum size of the transactions also remains unchanged. Rabobank analysts note too that STS-eligibility is still constrained by other criteria, such as only the top-rated senior positions in ABS being eligible under LCR.

Additionally, it is proposed that eligible securitisations remain in the level 2B bucket, which potentially means that little progress has been made in terms of the relative attractiveness of ABS versus other instruments. For example, covered bonds tied to the euro benchmark receive a haircut of 7%, compared to 25% for auto ABS and RMBS.

In terms of feedback on the consultation, many of the 19 respondents state that there should be an explicit distinction between STS and non-STS high quality securitisations, with the preference for the former as level 2A HQLA. The latter would stay in place as level 2B justified, according to the Rabobank analysts, by the additional requirements in achieving STS designation as well as improved liquidity.

Others that weighed in on the consultation also suggest that the minimum rating requirements should be relaxed and that the first-ranking requirement for auto loans should be dropped. Additionally, some suggested including ABCP, subject to conditions.

The updated LCR regulations are expected to be adopted by March 2018, followed by a review from the European Parliament and the Council, with application of the LCR amendment 18 months after publication. STS will then become compulsory for LCR HQLA in 2019 or 2020 which, the analysts conclude, could be a "game-changer" for the STS framework.

RB

Capital Relief Trades

Synthetic exposure expanded

Bank of Ireland has released its Pillar Three report, which indicates an expansion of its synthetic securitisation exposure. It also provides insight into the lender's counterparty exposures.
According to the report, the total outstanding amount of synthetic securitisation exposure originated by the Bank of Ireland group increased by nearly a third in 2017 to €4.3bn. This comprises the bulk of the lender's total securitisation exposure (€5.36bn), with traditional securitisation at €1bn for 2017, a slight decrease from the €1.25bn for 2016. Traditional deals securitise residential mortgages, while its synthetics reference corporate loans.

This was reflected in the rise in retained securitisation positions, with synthetic exposures notching up from €2.7bn in 2016 to nearly €4bn. Purchased positions, which are all traditional securitisations, saw a slight reduction from €181m in 2016 to €146m in 2017.

The group originated one securitisation at end-December 2017 that qualifies for de-recognition under Pillar One. The transaction is understood to be Mespil Securities 2017-1, an approximately US$1.71bn significant risk transfer transaction of leveraged acquisition finance assets (classified as corporate exposures) (SCI 29 November 2017).

The bank's primary markets are Ireland and the UK, but it also has branches in the US, Germany and France - although the value of the exposures booked on the balance sheet of these branches is currently at less than 5% of group credit exposures on a combined basis. However, in counterparty residence terms, US exposures account for nearly €1.7bn.

From the total US exposure, corporates capture most of the value at €1.57bn, followed by retail (€88m) and institutions (€29m). The bulk of the geographical exposure remains Ireland and the UK, with €40.5bn and €29bn respectively.

SME and specialised lending accounts for €10bn and €948m respectively, from a €76bn total net value exposure at end-2017. The bulk of the total net exposure remains retail, at €52bn, and the numbers are broadly similar with those of 2016.

SP

RMBS

Stop advance application diverging

The incorporation of 'stop-advance' provisions in US RMBS 2.0 deals appears to be becoming more prevalent. However, sponsors are implementing this mechanism in different ways, as they seek to mitigate losses and advance timeline ambiguity while maintaining liquidity for high investment grade securities.

Stop-advance mechanisms do not allow servicers to advance interest on delinquent loans after a predetermined time, typically 120 days for prime transactions. Some RMBS 2.0 transactions feature augmented payment priorities, whereby interest from all available funds is remitted first to high IG classes before paying principal. Other structures mitigate the risk of liquidity interruption on the senior securities by excluding the amount of unpaid stop advance interest in the definition of interest owed within a transaction's governing documents.

KBRA notes that new features are emerging that enhance higher priority noteholders' positions by changing payment priority or locking out subordinate noteholders from principal payments based on serious loan delinquencies. The agency categorises the constructs for addressing high IG liquidity risk into definitional, structural and/or additional credit enhancement.

The definitional construct is generally applied by decreasing interest owed to security holders by the amount of delinquent interest. The structural construct is applied by prioritising interest payments to high IG classes, so that their interest burden is met at the top of the waterfall.

These constructs are primarily seen in the prime RMBS sector, according to KBRA. Non-prime securitisations may also use excess spread as additional credit enhancement.

To illustrate how stop-advance transactions can differ, the agency points to recent Sequoia Mortgage Trust and Galton Funding Mortgage Trust issuances. All Redwood deals issued since SEMT 2015-2 have incorporated a 120-day stop-advance feature, whereby the contractually owed interest amount is reduced below the optimal interest amount.

While such delinquent interest reduces available funds flowing through the priority of payments, the reductions are not classified as interest shortfalls under the governing documents while the related loan remains at least 120 days delinquent. As such, the payment priority does not permit these interest reductions to be repaid from available funds and the delinquent interest is borne first by the most junior class.

Repayment would generally be due to a loan curing from delinquency or a full recovery of the loan principal balance, along with the delinquent interest in liquidation. However, a liquidation with only a partial recovery would not allow delinquent interest borne by the junior-most class to be repaid and no interest shortfall will be created.

Redwood also includes the balance of the stop advance mortgage loans in the applicable detachment points of the subordinate tranches. As the mechanism includes serious delinquencies, it takes effect earlier than it would in a traditional shifting-interest structure.

Meanwhile, in the framework Galton employs, interest not advanced lowers the available funds while the interest owed to noteholders remains unchanged. The sponsor addresses these liquidity risks by allowing for potential shortfalls to be recovered from available funds that would otherwise be used to pay classes with lower payment priorities. Interest shortfall risks are further mitigated for the triple-A and double-A rated classes as the waterfall pays interest to these classes sequentially, prior to payments of principal on any notes.

CS

Structured Finance

Market moves - 2 March

North America

Cowen and Company has named Philip Cushman as head of global institutional sales which includes managing both the institutional equity and credit sales teams and Burton Welly has been named head of special situations and distressed credit trading, Cowen and Company, increasing his responsibilities to include all distressed credit trading initiatives. Prior to joining Cowen, Cushman served as md and head of global equity product management at Jefferies, as well as a member of Jefferies' equity operating committee. Welly joined Cowen in 2016 as part of the firm's acquisition of certain businesses from CRT Capital.

Mayer Brown has poached five capital markets and tax partners from Morrison & Foerster. One of the new hires is Anna Pinedo, who will serve as a co-leader of the firm's global capital markets practice in New York and concentrates her practice on securities and derivatives. Also joining in New York are James Tanenbaum (who focuses on corporate finance and the structuring of complex domestic and international capital markets transactions) and Jerry Marlatt (who represents issuers, underwriters and placement agents in covered bonds, CP and structured investment and specialised operating vehicles). Thomas Humphreys and Remmelt Reigersman - who join the firm in New York and Northern California respectively - have extensive experience with the tax aspects of capital markets transactions. Mayer Brown has also hired James John Antonopoulos in its global banking and finance practice and structured finance group as a partner in Chicago. Antonopoulos joins from Kirkland & Ellis.

White & Case has expanded its global banking practice with the addition of Pratin Vallabhaneni as a partner. Vallabhaneni will work closely with the firm's global financial institutions advisory practice and will advise clients on complex fintech-related issues. Vallabhaneni joins the firm from Arnold & Porter and was previously an investment banker at a global financial services firm, where he advised on the valuation and execution of M&A, capital markets, securitisation and restructuring mandates.

China

The People's Bank of China has licensed the first non-state-owned consumer credit bureau, Baihang Credit Bureau, through 31 January 2021 as a consumer credit information business.

Structured product launch

Marex Solutions, a division of Marex Spectron specialising in the manufacture of customised OTC derivatives, has launched a structured investment product offering. This new structured investment business customises notes, backed by Marex Spectron or third-party corporates, and includes capital protected, participation, yield enhancement and leveraged products on commodities, equities, foreign exchange, credit and mutual funds. The first trade was on 23 February, with the launch of a one-year, 100% capital-protected note that provides the investor with upside participation to a credit fund.

Disclosure RFC

The Basel Committee has issued for consultation an updated framework for Pillar 3 disclosure requirements. Proposed new or revised requirements include: benchmarking a bank's RWA, as calculated by its internal models, with RWA calculated according to the standardised approaches; providing an overview of risk management, key prudential metrics and RWA; and new disclosures on asset encumbrance and capital distribution constraints. Separately, the Committee is seeking feedback on the scope of application of the disclosure requirement on the composition of regulatory capital that was introduced in March 2017. Comments on the proposals are invited by 25 May.

Acquisitions

Cerberus Capital Management has reached an agreement with Bluestone Group to acquire its Australasian mortgage lending and portfolio servicing operations, Bluestone Holdings Australia.

PHH Corporation has entered into a definitive agreement in which Ocwen Financial Corporation will acquire all of the company's outstanding shares of common stock in an all cash transaction valued at US$360m. As part of the transaction, Ocwen will assume US$119 million of PHH's outstanding unsecured debt. Following closing, shares of PHH common stock will no longer be listed on NYSE. Credit Suisse served as financial advisor and Jones Day served as legal counsel to PHH Corporation on the transaction, and Latham & Watkins served as legal counsel to the Board of PHH Corporation.

Optimum Asset Management has acquired Razorbill Advisors enabling Optimum to add resources to its current team of managers, integrate leading-edge technology into its management toolkit and broaden its range of asset management strategies. Optimum has also hired Pierre-Philippe Ste-Marie as cio, fixed income, Hugues Sauvé, as vp, active management, Robert Hesselbo as vp, financial technology and Sylvain Crouzet, vp, financial modelling.

ILS

Hiscox Re Insurance Linked Strategies, the ILS asset management arm of Hiscox, has appointed Ben Fox to its Bermuda-based ILS investment team as portfolio manager, subject to Bermuda immigration approval. Fox joins from Ontario Teachers' Pension Plan where he was principal of ILS since 2014.

Partnerships

Funds affiliated with Apollo Global Management have announced a strategic partnership with Apeiron Management to focus on investments in Italian corporate credit opportunities. The initiative targets innovative financing solutions for Italian corporate borrowers, and investments in impaired loans, claims, and other credit instruments tied to Italian companies. The partnership will focus primarily on stressed and distressed opportunities, insolvency compositions, and non-performing corporate credit in Italy. Capital will be deployed via debt and equity investments in the €5m to €50m range, with the capacity to pursue larger transactions opportunistically. To accomplish these goals, Apollo has established Apollo Delos as a dedicated investment platform. Apeiron will work with Apollo in the implementation of its Italian investment strategies for funds managed by Apollo through the Delos platform, and will provide support in the origination, due diligence, structuring, execution and management of transactions.

Board nominees

Blue Lion Capital (BLC) – which manages funds that beneficially own approximately 6% of the stock of HomeStreet – intends to nominate two candidates for election to the HomeStreet board and make two substantive corporate governance proposals at the company's 2018 annual meeting. The move aims to address "numerous strategic missteps, inadequate corporate stewardship and poor financial performance", which BLC says has eroded shareholder confidence and destroyed shareholder value. BLC intends to propose a binding change to the company's bylaws that would require the roles of chairman and ceo to be separate. BLC's nominees to the board are: Ronald Tanemura, who serves as a director of post-reorganisation Lehman Brothers Holdings Inc and TPG Specialty Lending, and was previously global co-head of credit derivatives at Goldman Sachs; and Paul Miller, who was previously md and head of the financial institutions group of FBR Capital Markets. HomeStreet states that it will carefully evaluate the proposal.

SPV business expansion

CSC has expanded its special purpose entity (SPV), independent director, and fund administration business in the US to the structured finance and private equity markets. CSC provides clients with a range of services including outsourced fund administration, debt capital markets services, SPV management and administrative services, and agency services. CSC's team specialises in customised services from pre-closing through to completion of transaction. Through its wholly owned subsidiary, Delaware Trust Company, CSC will continue to provide US-based clients with specialised corporate trust and agency services.