Contents

Structured Finance

Symbiotic relationship?

Marketplace lending enters the mainstream

The online lending sector has become mainstream, forcing marketplace platforms to better differentiate the experience they offer to borrowers. At the same time, the entrance of new players – such as Goldman Sachs’ Marcus offering – is putting pressure on incumbents to remain competitive and relevant. While online platforms were previously largely expected to replace – or at least significantly disrupt – banks, a symbiotic relationship now appears to be growing between both types of lenders.

Ram Ahluwalia, founder and ceo of PeerIQ, notes that overall the supply of credit is increasing, which means that the market for personal loans is robust and growing. “The online lending sector has gone mainstream,” he suggests. “Hence, it is necessary for platforms to differentiate the experience they offer to the borrower. That, along with liquidity, are the main questions that lenders are dealing with now.”

Ahluwalia points out that Marcus doesn’t charge origination fees and, as such, has put pressure on other platforms to reduce their fees. “It also has access to deposit financing and a competitive advantage in terms of funding loans, especially when capital markets are closed. Marcus has inspired other banks, ranging from large money center banks to community banks, to explore entering the market,” he observes.

Whereas Lending Club and SoFi continue to focus on significant growth, banks tend to take a more cautious approach, especially given that the credit cycle is turning. For instance, Lending Club is experimenting with auto loan lending and SoFi is exploring whether to begin offering checking accounts. In contrast, Prosper and Marlette appear to be doubling-down on their core offerings.

“In terms of the future, it’s clear that marketplace lending growth will come from both new, innovative entrants and old school players - including traditional banks, whether it be JPMorgan, for example, or PNC and Fifth Third,” says Manish Kapoor, managing principal at West Wheelock Capital. “Ultimately, fintech firms are in the business of lending – whether directly or indirectly. The newer platforms are driving the incumbents to be better at lending and forcing them to re-examine fundamental parts of the traditional lending process.”

Generally, participants are redefining the origination process by making it user-friendly. “If a borrower took out a loan for less than, say, US$1m, historically the lending process has not been very user-friendly. MPL platforms have revolutionised this mentality and institutions now are far more customer-centric and make the lending process much more user-friendly for borrowers,” Kapoor suggests.

For many monoline fintech lenders, credit performance relates to their relationship with borrowers, according to Ahluwalia. If a borrower takes out multiple products with a given platform, the borrower is more likely to prioritise their payments to that platform.

“Many platforms are competing to own the customer relationship and capture their share of a consumer’s wallet across both liabilities and assets,” he explains. “SoFi, for example, provides job-seeking support and community building via a membership model that is inspired by American Express. The idea is to engage with consumers – although it’s costly to achieve.”

One strategic alternative is for platforms to “focus, focus, focus” and make their single core offering the best experience possible, all the way from acquisition to collections and recovery. Another strategy is to lower financing costs by broadening the investor base to credit unions and banks, and not simply rely on warehousing and securitisation for funding.

Indeed, the ultimate differentiator for platforms in the long term is cost of funding, according to Kapoor – although he points out that no platform can fund at a lower rate than a bank. “Many platforms talk about their rich data approach - analysing not only FICO scores, but also a spectrum of other criteria - trying to quantify any metric they can to provide predictive capability. However, a number of platforms confuse correlation with causation. There isn’t much brand loyalty among consumers: if a borrower has need for credit, it makes sense for them to check the rates of multiple platforms and pick the one cheapest lender.”

Nevertheless, Funding Circle chief capital officer Sachin Patel suggests that a bifurcation has emerged between platforms with a genuine purpose – which have continued to grow – and those without. “The fundamental question for lending platforms is whether they add value for both investors and borrowers,” he notes.

He continues: “Before the financial crisis, approximately 85% of the UK’s small business lending market was served by banks. Since 2010, banks have withdrawn capital from the small business sector to the point where Funding Circle is now regularly facilitating more quarterly net lending to small businesses than the banks. This gives us a real purpose.”

Meanwhile, lending platforms have migrated from disrupting banks to working with them. For instance, Barclays, RBS and Santander refer their customers to Funding Circle, which means even more small businesses can be assisted.

Funding Circle has also developed other partnerships, which have helped drive its growth. In one partnership, Aegon lends through the platform: rather than originating the loans itself, it acquires the loans Funding Circle originates. In another, since INTRUST Bank can’t originate loans outside of its home state (Kansas), it lends through Funding Circle in order to build a more diverse borrower base.

The platform is around 70% institutional funded and it has worked with investors including the EIF, KfW and the British Business Bank. “Because such players are constantly conducting due-diligence and because we believe we’re serving a social purpose, we’re held to higher standards and it has made us a better business,” Patel concludes.

Corinne Smith

This is a shortened version of an article that first appeared in the spring issue of SCI's quarterly magazine. The full version and the rest of the magazine can be accessed here.

Structured Finance

'Constant demand'

UK firms hiring across range of SF roles

Hiring in the UK structured finance space has been buoyant in the last 12 months, with recruitment across a range of roles and asset classes. While there has been a slight slowdown in the first quarter of this year, hiring is expected to pick up after March, once bonuses have been delivered.

Angel Valchev, consultant at Michael Page, comments that in the structured finance and securitisation space, he saw a high a demand for roles toward the second half of last year. He adds that much of the recruitment was concentrated in the ABS and RMBS with “a number of midsize firms such as challenger banks and mortgage lenders, and a few merchant banks hiring towards the end of last year.”

Additionally, Valchev says that one of the major hires around summer last year was a head of structured finance for a mortgage lender. As well as this, he says that “rating agencies were also a source of hiring last year and we recruited for a few senior structured finance analysts roles at a major agency based in Canary Wharf.”

He concedes that the first quarter of this year has been “a bit quiet”, but adds that this isn’t unusual as “March tends to be bonus time”. People aren’t therefore looking to move before they get their bonus, but as such as he suggests it will pick up again after March.

In terms of where he sees further hires in the securitisation space coming from, Valchev is optimistic about fintech firms as many are “still in an expansionary phase.” As they build out their balance sheets to a certain size it would therefore “make sense for these firms to look at securitising and they may therefore need to recruit experts in this field.”

Saahil Mehra, consultant at Maxfield Search, says he is similarly “positive about hiring in the structured finance space.” He adds that he has “seen a constant demand for candidates at all levels in this space for at least a couple of years now.”

Mehra adds that the general trend this quarter has been for hiring at associate level, “as many banks go through their bonus season” and teams “look to build out…production element[s], core analysis, pitch/sales” expertise. He adds that senior hires are picking up now at vp and associate director level, particularly for origination, project generation and client facing roles.

He adds that his firm is currently recruiting for a few origination roles at some major UK banks and he adds that he has seen most structured finance hires coming from the banking sector. Mehra suggests, however, that this could be as much to do with his firm’s involvement in the banking sector than market conditions.

Structured finance portfolio managers are also in demand, he says, alongside banks asking for structured finance professionals with execution skills but, notes Mehra, these are “slightly harder to come by.” He suggests that individuals “seem to sometimes switch between origination and execution roles as they look to get experience of the full transaction cycle from beginning to end.”

So far, Brexit isn’t harming Mehra’s business, and he adds that it doesn’t seem to be impacting hiring on a domestic level, particularly for major institutions with a pan-European presence. He concludes that it equally “doesn’t look like it will have much of an impact in future either, as far as our clients are telling us to date.”

Richard Budden

Structured Finance

Picking up pace

European ABS market update

European ABS secondary market activity has been relatively subdued so far this week. However, the primary market appears to be picking up pace, with a pair of CMBS in focus and a new UK RMBS mandated.

“Given the lack of new issuance this year, we are expecting the two CMBS currently in the market – Kanaal CMBS Finance 2019 [SCI 20 March] and Taurus 2019-1 FR [SCI 27 March] - to be successful. For example, guidance for the latter has tightened across the capital structure, with the class A notes now talked at three-month Euribor plus 100bp area,” says one trader. The deal is expected to price this afternoon.

Meanwhile, UK Mortgages has mandated NatWest as arranger for Barley Hill No. 1, a UK RMBS backed by first-ranking owner-occupied mortgages originated by The Mortgage Lender since 2016. TwentyFour Asset Management is portfolio advisor on the transaction, which is expected to offer triple-A rated class A and double-A plus class B notes and begins roadshowing tomorrow (29 March).

Regarding Cerberus’s £3.9bn Towd Point Mortgage Funding 2019 - Granite4 (SCI 25 March), the trader notes that it is “curious” how the bonds were placed, with the almost £3bn senior tranche preplaced at three-month Libor plus 102.5bp DM and the class B through F tranches available upon request from the joint leads Bank of America Merrill Lynch, Barclays and Morgan Stanley.

“I guess the seller and/or leads are concerned about the Brexit headline risk, so opted for a club placement,” the trader suggests.

In secondary, there is a focus on continental short-dated (less than one-year maturity) paper. “Clients are keeping a defensive view on the sector, given the general negative sentiment that they expect to arise in the second half of the year,” the trader observes.

The trader adds: “We have also seen some renewed interest in Italian second-pay legacy bonds, as a number of pre-crisis deals have been called, including BPM 2, INTS 3 and VELAA 2006-1.”

Corinne Smith

Structured Finance

SCI Start the Week - 25 March

A review of securitisation activity over the past seven days

NPL seminar
Early-bird registration for SCI's 2nd NPL Securitisation Seminar on 13 May is now open. Hosted by Orrick in Milan, the event will cover the Italian guarantee scheme, regulations, deal performance, servicing strategies, new entrants and investment trends. For more information or to register, click here.

Market commentary
The focus in the US CLO secondary market last week was on equity (SCI 21 March). Over US$100m in equity tranches was in for the bid across US and European CLOs, according to one trader.

Of note, a large (US$31m current face) control equity piece did not trade on 19 March. SCI's PriceABS archive shows that the AMMC 2014-15X SUB bond had been talked in the mid- to high-60s.

"Usually there is a premium for control rights, but the bids for this piece were several points back than is normal. The market seemed unwilling to pay up in this instance, possibly reflecting uncertainty over where loans will be later in the year - although the hit ratio of DNTs is typically higher for equity tranches than for investment grade bonds, as they are more opportunistic plays," the trader observed.

Transaction of the week
The first publicly rated securitisation of Irish and Spanish equity release mortgages (ERMs) has hit the market (SCI 20 March). The €256.4m SMI Equity Release 2018-1 RMBS is backed by 2,233 loans originated by Seniors Money Ireland and Seniors Money Spain (collectively known as SMI).

The loans are generally seasoned more than 10 years and the properties are predominantly located in Ireland (accounting for 94% of the pool), with the remainder in Spain. The Spanish properties all have UK obligors.

Within Ireland, the portfolio is overweighted within County Dublin (44.9%), although KBRA notes that this is not out of line with other Irish RMBS portfolios. The agency points out that unlike traditional mortgages where borrower defaults and regional property market stress are correlated, ERM repayments remain largely a function of mortality, regardless of the prevailing property market environment. Accordingly, it did not add an additional geographic concentration factor to its property value decline assumptions for the portfolio.

The weighted average age of the youngest active borrower age in the pool is approximately 76 years. KBRA notes that as a result, mortality and morbidity events will tend to be more back-loaded and therefore allow for a longer accrual period on the loan balance and increased crossover risk. In addition, the back-loaded nature of these events provides potentially less liquidity and deleveraging to the rated classes than a similar pool with a higher average borrower age.

Due to the seasoned nature of the loans, a portion of the portfolio (7.8% at cut-off) is inactive and is expected to be liquidated within the next four quarters. This provides an early source of liquidity relative to newly originated equity release mortgages or pools without inactive loans, according to the rating agency.

Other deal-related news

• Insurance firms are targeting mezzanine tranches in dual-tranche capital relief trades as banks warm up to unfunded insurance structures, given the lower cost of protection and the relative safety of the mezzanine tranches in these deals (SCI 10 January). Indeed, benchmark unfunded trades have already been completed (SCI 22 March).
• The Italian government has introduced a successor to the GACS scheme. The replacement guarantee features a longer extension period that provides more certainty for banks, raising the prospects for non-performing loan securitisation issuance going forward (SCI 22 March).  
• Goldman Sachs is in the market with a Dutch CMBS secured by 17 predominantly office and retail assets. Dubbed Kanaal CMBS Finance 2019, the €278.35m transaction is backed by two uncrossed limited recourse, first-lien mortgage loans - the €138m Maxima loan and the €140.3m Big Six loan - sponsored by Marathon Asset Management and Castlelake respectively (SCI 20 March).
• No further disbursements are expected for the DECO 2007-C4 CMBS, following a final recovery determination for the transaction. Duff & Phelps has been instructed to assist with the liquidation of the issuer, to which the trustee DTCL does not intend to object, unless instructed otherwise by noteholders. For more CRE-related news, see SCI's CMBS loan events database.
• Cerberus has confirmed that it plans to exercise its portfolio purchase option in connection with the Towd Point Mortgage Funding 2016-Granite1 and 2016-Granite2 transactions, ahead of their first optional redemption dates (SCI 18 January). If the portfolio purchase option is exercised, the RMBS notes will be redeemed on their first optional redemption date (SCI 22 March).

Regulatory round-up

• The Japanese Financial Services Agency has published its final rules on regulatory capital requirements applicable to Japanese banks and other institutions that invest in securitisation transactions (SCI 16 January). The rules allow certain exemptions from risk retention for open-market CLOs, provided investors demonstrate due diligence for the underlying loan collateral - a positive development for US CLOs, given the significant involvement of Japanese investors in the market (SCI 20 March).
• The US Fed has confirmed it intends to continue to allow its holdings of agency debt and agency MBS to decline, consistent with the aim of holding primarily Treasury securities in the longer run. Beginning in October 2019, principal payments received from agency debt and agency MBS will be reinvested in Treasury securities, subject to a maximum amount of US$20bn per month (SCI 21 March).
• PCS has confirmed its authorisation as a third-party verification agent by the UK FCA. The move enables it to provide verifications for European originators of the STS status of their securitisations in line with Article 27 of the STS Regulation (SCI 21 March).

Data

Pricings
The highlight of last week's new issue securitisations was the first STS-eligible ABS, from VW. As well as auto-related deals, a number of consumer ABS and CMBS priced.

The consumer ABS prints comprised £700m DLL UK Equipment Finance 2019-1, US$1.85bn DB Master Finance series 2019-1, US$330.31m Foundation Finance Trust 2019-1, A$301m Flexi ABS Trust 2019-1 and US$922m MMAF Equipment Finance 2019-A. The auto ABS pricings were US$321.86m Carvana Auto Receivables Trust 2019-1, US$1bn Chesapeake Funding II Series 2019-1, US$1.63bn Ford Credit Auto Owner Trust 2019-A and €960m VCL 28.

The CMBS new issues comprised US$833m BANK 2019-BNK17, US$1.15bn BMARK 2019-B10, US$503.5m Cloverleaf Cold Storage Trust 2019-CHL2 and US$900m RETL 2019-RVP. Finally, the sole RMBS print was US$608m STACR 2019-DNA2.

BWIC volume

Structured Finance

STS firm announces debut deal

Transaction marks second deal to receive STS label

Prime Collateralised Securities (PCS) has announced its inaugural transaction to be verified as STS-compliant by the firm, marking the second European securitisation to receive the STS label. The transaction, dubbed Storm 2019-1, is a €1.1bn Dutch RMBS from Obvion – a wholly-owned subsidiary of Rabobank - and is expected to close on 12 April 2019.

The transaction will have five classes of notes and the class A notes are expected to be rated triple-A by Moody’s, Fitch and S&P. The size of the tranches has yet to be announced, although they will be issued in EUR, tracking three-month Euribor.

Moody's notes several strengths of the transaction, including sound performance of previous transactions from the STORM shelf and the experienced nature of the originator, Obvion, having completed 49 previous securitisations, including STORM 2019-1. Moody's adds that the deal is also supported by an interest rate swap, swapping the fixed interest on the assets for the floating interest on the notes, senior costs and a fixed excess spread of 0.50%, with Rabobank acting as a backup swap counterparty, obliged to assume the obligations of Obvion in case of Obvion's default. 

The rating agency adds that 5.42% of the loan parts in the pool are Nationale Hypotheek Garantie (NHG)-guaranteed and that, as long as the loans have been originated in accordance with the NHG criteria, Stichting Waarborgfonds Eigen Woningen will cover for any losses. Finally, Moody's says that the deal benefits from a reserve fund of 1.01% at closing and a cash advance facility of 2.0% of the principal amount outstanding of the notes (including the class E notes), with a minimum of 1.45% of the original note balance - this facility will be available to the issuer on any quarterly payment date, as long as there are notes outstanding.

Richard Budden

Structured Finance

Noteholders exposed?

Concerns raised over recent French CMBS

Bank of America Merrill Lynch (BAML) is marketing a €249.6m European CMBS. Dubbed Taurus 2019-1 FR, it is backed by 206 predominantly office properties located throughout France, let by Electricite de France (EDF).

The transaction has been provisionally rated by KBRA, DBRS and Moody’s as AAA/AAA/Aaa on the €135.3m class A notes (with IPTs at three-month Euribor plus 100/110bp), AA/AA(low)/Aa3 on the €30.6m class Bs (plus 160/170bp), A/A(low)/A2 on the €34.7m class Cs (plus 210/220bp), BBB/BBB(low)/Baa1 on the €27.4m class Ds (plus 250/275bp), and BB-plus/BB(low)/Baa3 on the €9.1m class E notes. The €0.1m class X notes are unrated and retained.

DBRS notes that the transaction comprises a securitisation of a five-year senior CRE acquisition facility advanced by BAML to Colony Capital in the context of of a sale-and-lease-back operation between Colony and EDF. The 206 assets securing the senior loan are held by three French borrowers: ColPower SCI, ColPowerSister SAS and ColMDB SAS.

Fitch’s structured finance analysts comment that the transaction could be constrained by the rating of EDF - the sole tenant in the transaction – which provides 98% of gross rental income for a WAL lease term to first break of six years. The analysts add that, broadly, the portfolio of office/industrial buildings is of secondary or tertiary quality with many properties in semi-rural locations.

The analysts add that the structure of the financing exposes noteholders to collateral risks because senior noteholders could become materially more exposed to properties with the poorest prospects of income-generation, if Colony Capital were to release the better-quality assets.

Furthermore, the agency’s analysts say that while the portfolio is used by EDF and ENEDIS to facilitate the maintenance of the local electricity grid, it is unclear which sites are and will remain essential to these operators, exposing noteholders to the potential loss of the current tenant in part of the portfolio. As such, it might prove challenging to attract enough interest among potential alternative occupiers to create rental value in many of the buildings the tenant could elect to vacate.

Additionally, should EDF or ENEDIS become bankrupt, significant uncertainty would follow and – given the clear public interest in the grid being maintained – Fitch’s analysts say they cannot rule out circumstances in which the landlord is denied timely vacant possession, even if rent is not paid in full. The result could be a deprivation of cash flow to the issuer for a prolonged period of time and, while the loan has debt yield covenants and cash trap, neither can protect noteholders from a sudden drop in income caused by bankruptcy of the tenant group.

Regardless, rental income from an investment grade tenant for an average of six years provides for significant equity distributions after debt service and, with all-in LTV of 78.9%, the sponsor can be confident in recouping its upfront equity investment prior to loan maturity, regardless of its ability to refinance. Fitch’s analysts conclude, however, that noteholders are fully exposed to the quality and terminal value of the properties.

Richard Budden

Advisory

Irish BTL RMBS launched

Company hires and sector developments

Irish BTL RMBS launched

Bank of Ireland has mandated a new Irish buy-to-let RMBS deal. Dubbed Mulcair Securities, the €358m transaction securitises a legacy BTL loan portfolio that was originated by the Bank of Ireland, ICS Building Society and Bank of Ireland Mortgage Bank. The rationale behind the deal is to offload non-performing exposures from the seller’s balance sheet (according to EBA definitions). Rabobank’s structured finance analysts note that the loans in the pool have been restructured, resulting in around 2.5% in arrears longer than one month but there are no delinquencies longer than three months.

ILS

SCOR Investment Partners has promoted Sidney Rostan to head of ILS, effective from 1 April. He replaces Vincent Prabis, who has chosen to pursue a new direction in his career, and reports to cio Fabrice Rossary. Rostan joined SCOR Investment Partners in July 2015 as a senior ILS portfolio manager. Additionally, ILS portfolio manager Pierre Mouilhade will take on extra responsibility for private transactions, while Grégory Scheffer is appointed ILS portfolio manager. The pair report to Rostan.

UMBS exchange

Freddie Mac has completed exchanges of Freddie Mac Gold PCs for UMBS Mirror Certificates via its Dealer Direct portal, as part of the single security initiative. Specifically, the GSE has conducted exchanges of certain eligible Freddie Mac 45-day payment delay Gold Mortgage Participation Certificates (PCs) and Giant PC securities held in its portfolio for Freddie Mac 55-day payment delay, TBA-eligible Uniform Mortgage-backed Securities (UMBS) Mirror Certificates. It expects to complete further controlled exchanges of eligible securities held in its own portfolio and of eligible securities held by certain other holders in April.

Structured Finance

Granite refinancing

Sector developments and company hires

Europe

Muzinich & Co has hired Laurence Kubli as structured credit specialist with immediate effect. Based in Zurich, Laurence will focus on creating the firm’s first structured credit strategies in this newly-created role. Laurence joins from GAM Investments, where she was senior pm, structured finance and corporate credit for 11 years. Prior to that, she held various roles at Clariden Leu Bank, Man Group, Merrill Lynch Capital Markets and Credit Suisse.

Granite refinancing

Cerberus is in the market with Towd Point Mortgage Funding 2019 - Granite4, backed by prime UK residential mortgages previously securitised within the Towd Point Mortgage Funding 2016 - Granite 1 and 2016 - Granite2 RMBS. The majority (93.1%) of the £3.9bn pool is represented by the assets of Granite 1 - which will be transferred by a true sale – with the remainder represented by the assets of Granite 2, which will be transferred to the issuer by way of English and Scots law declarations of trust. Cerberus announced last week that it planned to exercise its portfolio purchase option in connection with the deals (SCI 22 March).

Structured Finance

Credit platform nabs investment vet

Company hires and sector developments

Credit platform nabs investment vet

B Riley Capital Management has named Tim Gramatovich as cio of its newly established credit platform, Gateway Credit Partners. The team will focus on identifying and acquiring undervalued securities in the non-investment grade corporate credit market and intends to implement its portfolio management services through actively managed CDO structures. Gramatovich has over 30 years of experience in the leveraged finance business and was previously co-founder and cio of Peritus Asset Management, where he was responsible for establishing the investment process that allowed the firm to issue several cashflow high yield bond CDOs.

Structured Finance

CRT credit event

Company hires and sector developments

CRT credit event

HSBC’s Metrix series 2015-1 CLN has suffered another credit event. The issuer received a credit event notice confirming that a bankruptcy credit event occurred on 15 March with respect to a reference entity that is believed to be Interserve, which was recently sold out of administration after shareholders rejected a rescue deal for the company. The Metrix risk transfer transaction had previously been hit by a credit event, following the liquidation of Carillion last year (SCI 19 January 2018).

ECB adopts collateral framework

The ECB announced last week it will adopt the new transparency requirements of the Securitisation Regulation (the new ESMA reporting templates) for its collateral framework in the future. The new reporting standards are going to apply for new securitisation transactions – those issued after 1 January - but only if two conditions are fulfilled: one, the new ESMA reporting templates have been adopted and two, at least one securitisation repository has been registered with ESMA. Three months after both conditions are fulfilled, the new reporting templates will become a requirement for ECB repo eligibility.

Older transactions, issued prior to 1 January 2019, will not be subject to the new reporting templates, and will be grandfathered for at least three years to use the current ECB reporting templates. Rabobank comments that these announcements are positive developments, as in the end there will only be one reporting template, both for the purposes of complying with the Securitisation Regulation, as well to ECB repo eligibility requirements.

GSE makes senior hire

Fannie Mae has appointed Hugh Frater as ceo, having previously served as interim ceo since October 2018 and sat on the GSE’s board since 2016. Frater currently serves as non-executive chairman of VEREIT and formerly led Berkadia Commercial Mortgage as chairman and ceo. Earlier in his career, he was an evp at PNC Financial Services and a founding partner and md of BlackRock.

High-profile prosecutor poached

Moses & Singer has hired Howard Fischer as partner in its New York office. Fischer served as senior trial counsel at the US SEC over the last decade and prosecuted high profile cases against both the "London Whale", JPMorgan Chase trader Bruno Iksil, and an investment advisor that featured in "The Big Short" (Wing Chau).  At Moses & Singer, he will be working in the firm's white collar defense and securities and financial litigation practices, while also sharing his expertise with other relevant practice groups.      

MBS desk bulks up

BOK Financial has strengthened its MBS desk with the hiring of Steve Palmer and Sung Cho to head its new issue CMO and agency CMO derivative businesses. Palmer previously traded non-agency CMOs at JPMorgan, before running the mortgage platform at BNY Mellon and then building out the new issue CMO platform at Keybanc. Cho previously worked at Merrill Lynch, JPMorgan, Barclays and Citi, and has expertise in valuation of CMO cashflows.

Third STS ABS announced

A third transaction verified as STS compliant has been posted on ESMA’s STS register.  According to Rabobank, the transaction is a French RMBS transaction dubbed Private Harmony French Home Loans FCT. Further details are not yet available.

Structured Finance

CEO appointed

Sector developments and company hires

CEO appointed

Curtis Arledge has joined Mariner Investment Group as chairman and ceo. In addition to his role at Mariner, Arledge will serve as head of Mariner subsidiary, ORIX USA asset management, responsible for driving the company’s overall strategy in the space, including facilitating opportunities for growth across ORIX USA’s enterprise. A founding member of Mariner, Arledge has returned to the firm, and will be responsible for overseeing all aspects of the business and developing new business lines. Mariner founder Bill Michaelcheck will continue in his role as the firm’s cio and portfolio manager for Mariner’s flagship multi-strategy hedge fund. Arledge previously served as the ceo of BNY Mellon Investment Management and was also responsible for the firm’s markets group.

Debut RMBS prepped

LendingHome has completed its first syndicated, revolving securitisation of residential transition loans, issuing approximately US$208m of non-rated, asset-backed securities. LendingHome Funding Corporation – a wholly owned subsidiary of LendingHome Corporation – acted as sponsor for the transaction and originated 100% of the loans in the transaction.

The transaction, which totals approximately US$219m in aggregate, was structured with a two-year revolving period during which principal payoffs can be reinvested in newly originated loans. The revolving structure enables an efficient funding for the asset class, as the underlying residential transition loans typically pay off in approximately seven months. The loans are generally 12 months in term and originated for the purpose of rehabilitation and resale of the underlying residential property.

The securitisation is structured as approximately US$208m of senior- and mezzanine-class offered certificates and approximately US$11m of subordinate-class, non-offered certificates for a total deal size of approximately US$219m.

Distressed head nabbed

GSO Capital Partners, has hired Bob Carrol as md and head of distressed trading. Carroll was previously responsible for all trading activity at Smith Cove Capital.

Investment head replaced

Investcorp has announce John Fraser, head of the firm’s US credit management unit will be retiring and Jim Feeley will be stepping in as co-head of US credit management. Feeley will be based in New York and report to Jeremy Ghose who will assume the duties of interim co-head of the same unit in addition to his role as head of Investcorp Credit Management. Most recently, Feeley was a senior md and head of credit and structured credit at Medley Management, where he built their tradable credit investment and CLO opportunity businesses.

Sidecar first announced

CCR Re has created the first sidecar domiciled in France, dubbed 157 Re.  By accepting a 25% stake in Cat World's Property Cat portfolio, 157 Re is offering a fully collateralised capacity to CCR Re, enabling it to continue its diversification and growth. 157 RE is an umbrella fund whose first sub-fund, 157 RE 19, will take effect on 1 April, 2019, and will be followed by others in the coming years based on investor demand and CCR Re's needs. 157 Re is the first ever sidecar to adopt the form of a securitisation mutual fund (FCT) under French law (a securitisation mutual fund that bears insurance risks), an instrument used until now solely for the securitisation of financial assets. 157 Re has been approved by the Prudential Control and Resolution Authority, and its tax regime, particularly with regard to investors, has been clarified by the Tax Administration.

Thailand head announced

Deustche Bank has hired Pimolpa Suntichok as head of its Thailand chief country officer and head of financing and solutions, starting in May this year. Suntichok was previously senior evp, head of commercial banking solutions at Siam Commercial Bank.