Contents

NPLs

Novel approach

UTPs drive ReoCo rethink

Investors and servicers in the Italian non-performing loan market are targeting a new approach to ReoCos as they eye the coming unlikely-to-pay (UTP) wave. Such an approach requires capabilities whose development remains a work in progress, however.

ReoCos are SPVs that have typically been used in the Italian market to buy and auction real estate collateral. However, servicers tend to identify collateral that can be sold at a price that can match business plan expectations, without considering the potential value of an asset.

Under the new approach, servicers and investors aim to develop the real estate collateral in order to sell it in the future for a higher price rather than liquidate it. Intrum is one investor that is an active user of such a strategy.

Salvatore Ruoppolo, head of real estate and leasing at Intrum Italy, explains: “The gist of it is to look at real estate collateral in the way that a real estate investor would look at it, rather than just count on a simple valuation. The aim is to reposition and upgrade the real estate collateral and share the process with investors ready to bid at the auctions or be ready to bid yourself. Proactive ReoCos are a winner, even if they lose a well-priced auction.”

He continues: “It’s especially useful for UTPs because this approach is better understood by the borrower; you look at the potential value of the collateral and lay out activities that will boost its price. However, it requires know-how and capabilities, and that is what is holding back other players from using the approach.”

Consequently, servicers need capabilities that will allow them to manage these real estate assets. Besides capability issues, the business of managing real estate is complex, since the traditional approach prescribes foreclosures when the new approach requires active property management.

Nevertheless, the active management approach will prove crucial in addressing the large stock of Italian UTPs. According to PwC data, UTPs now stand at €51bn in net book value terms, which exceeds the net book value equivalent for NPLs by €18bn.

Indeed, UTPs are the main driver behind the use of the new approach. “Many investors are working on bad loans and ReoCos have been used in that context for liquidating real estate collateral. However, the focus is now shifting to UTPs and they require a different approach, a going concern approach,” says Salvatore Lombardo, partner at PwC.

Similarly, Paolo Pellegrini, director general at Cerved Credit Management (CCM) notes: “With UTPs, you have to go directly to the debtor and not the court. If it’s clear that the UTP borrower won’t be able to sell the collateral in order to improve their credit position, ReoCos can buy and sell the asset, before they eventually write off part of the credit.”

Andrea Musico, head of UTPs and distressed real estate at CCM, adds: “If a borrower is a going concern, they might need capital injections to develop an asset, such as the construction of a property. This happens after the ReoCo has taken over the property and written off the debt. The goal is to then sell it later at a higher price.”

The new approach is even more salient for UTPs, given that they tend to be secured.

Massimo Famularo, board member at Frontis NPL, states: “The traditional approach to managing secured distressed loans requires working out the collateral until it’s eventually sold, without any maintenance interventions or improvements that may increase the value of the asset. However, sometimes it’s not possible to sell the asset as is and proactive real estate management is needed.”

The use of the new approach coincides with an expectation among NPL investors of bulk loan sales in order to boost collections rather than working out each loan individually (SCI 17 June). Famularo comments: “Within this context, you can either sell the claim to a servicer with the appropriate capabilities or develop those capabilities yourself and avoid the secondary market. Once you have the capabilities, you can focus on speeding up the recoveries.”

Stelios Papadopoulos

ABS

Mixed bag

Hybrid M&A, ABS transactions on the rise

Following the financial crisis, a growing number of financial assets have fallen into the hands of non-banks, which has led to a growing number of M&A transactions that feature securitisation and whole loan elements. These multi-faceted, hybrid deals “increase the complexity” of financial transactions and often necessitate advisors equally well-versed in M&A and ABS law to translate for parties on either side of the deal.

When companies look to acquire portfolios of loans, leases or receivables they tend to structure such deals as an M&A, securitisation or whole loan sale, comments Libby Raymond, partner at Mayer Brown. She adds that the chosen route can depend on the mix of assets – securitisation or whole loan deals are perhaps better suited to a portfolio of loans and receivables but for a portfolio of assets like people, IT or facilities, M&A might be more suitable.

The type of buyer, too, can have an impact; private equity and hedge funds may be more likely to look at buying the operations of a platform as well as financial assets, says Raymond. A strategic buyer that already operates a financial asset business, however, may only wish to buy the financial assets.

While M&A deals featuring securitisation and whole loan characteristics have been happening for a around twenty years, Raymond says these have gone up with the growth of the non-banks, which tend to have investment horizons of around seven to ten years. As a result, she adds, they may now be thinking of disposing of assets and, at the same time, they also tend to have broad expertise meaning they are willing to structure deals with elements of both securitisation and M&A.

These hybrid transactions, she says, can easily lead to confusion in terms of structure and terminology, so advisors with combined expertise are needed to translate for both types of deals. Such hybrid deals can occur when, says Raymond, “someone wants to buy a mortgage business in an M&A deal but they want to include securitisation techniques, such as they may want the seller to buy the loans back if warranties about the mortgage loans are breached.”

She continues: “On the other hand, the seller in a whole loan deal or securitisation may want to apply M&A techniques for the indemnification provisions. In M&A in the US the seller would typically cap buyer’s indemnities at say 10% or 20% of the purchase price. In securitisation or whole loan deals, warranty repurchase obligations are rarely capped.”

A securitisation concept that has also crept into M&A deals is that of cut-off dates, outlines Raymond, adding that in European M&A, lockbox transactions are common and are very seller friendly. She says that this has also started to creep into M&A deals in the US wherein the assets or business are sold as of a cut-off date prior to the date of closing.

Furthermore, data tapes – a well-established in securitisation – have begun to appear in M&A, which is unusual for a sector that tends to have a less granular focus on the underlying assets. As such, M&A transactions may take data tapes into account but zone in on only 5-10 data fields, while securitisations tend to cover many more data fields.

 Where securitisation is used to finance financial asset M&A deals, you can end up, says Raymond, with an M&A deal that has detailed securitisation-style representations which “may or may not be qualified by materiality”. ABS representations, on the other hand, are less likely to feature materiality qualifications, as seen in an M&A deal.

Looking ahead, there is the chance that these hybrid-style transactions could become more common largely, says Raymond, because of the growing regulatory burdens and capital requirements around consumer assets in general. As such, she concludes that “consolidation activity will likely increase across financial asset classes.”

Richard Budden

Structured Finance

Pros and cons

STS conversion benefits weighed

The incentives for converting pre-2019 securitisations into STS-compliant deals differ across sellers. But conversion may also have negatives for investors in such transactions, depending on how it’s achieved.

The focus on STS so far has been on new transactions, with more than a dozen compliant transactions launched in the primary market over the last few months, including four Dutch RMBS. Yet, according to Rabobank credit analysts Ruben van Leeuwen and Cas Bonsema, attention will likely shift to outstanding securitisations that were completed before 1 January 2019.

As of 30 April 2020, securitisations will need to have the STS designation in order to be eligible as high-quality liquid assets (HQLA) under the LCR rules for banks. As there is no grandfathering at present, there is a risk of substantial cliff effects for deals that aren’t converted to STS standards.

Nevertheless, the Rabobank analysts note that in the Dutch RMBS universe, market pricing doesn’t currently reflect conversion risk. Overall, sellers can’t benefit directly from any STS conversion; the benefits are more long-term, since the - bank treasury - investor base would benefit from the conversion.   

Boudewijn Dierick, head of ABS markets at BNP Paribas, explains: “Issuers of existing deals don’t get any benefit from STS because they have already been placed. If you do turn it into STS, you only do it for investors because they want LCR eligibility. Insurers, in particular, get better capital treatment on STS deals.”

However, the incentives for converting Dutch RMBS deals into STS differ across sellers. According to the Rabobank analysts, for Obvion, the investor argument is likely to be more important as the issuer depends considerably on RMBS as a funding tool. Additionally, it already has STS experience with Storm 2019-1 and Green Storm 2019.

Argenta Spaarbank also has a greater incentive to seek the STS label for its two outstanding Green Apple transactions, Green Apple 2017-1 and Green Apple 2018-1. The lender doesn’t have covered bonds in place as an alternative funding source and it also has STS experience with its most recent Green Apple 2019-1 NHG transaction.

On the other hand, the STS conversion incentives are weaker for other Dutch RMBS transactions. NN Bank (Arena, Hypenn) and Achmea Bank (DRMP) have condition pass-through (CPT) covered bonds in their funding mix, thus presenting a viable alternative to RMBS funding. Additionally, the hurdle for STS is quite high, given that they have no direct deal experience with STS.

However, the future of the CPT product has become somewhat more uncertain, given the ECB’s decision at the end of last year to exclude covered bonds from the CBPP3 purchase programme. Furthermore, potential costs associated with converting the transactions could prevent sellers from seeking an STS designation for their outstanding deals.

All these arguments presuppose that the benefits of STS convergence can be gauged at this stage, but the framework remains at its early stages, so it may be too early to tell. Alexander Batchvarov, md at BofA Merrill Lynch, notes: “The benefit of STS is threefold: lower regulatory capital applied to STS notes held by banks and insurers; LCR; and ECB repo eligibility. Theoretically, this should mean a broader investor base that includes banks and insurers, but it’s too early to tell. We are at the early stages of the STS market and not all regulations are in place and not all investors who can benefit from STS are ready to jump in. So we don’t see a particular pricing benefit.”

He continues: “Converting a deal may have benefits for the seller, but may have negatives for the investor, depending on how it’s done. A legacy deal priced and placed with investors may tighten when converted, so an existing investor may benefit from price appreciation. On the other hand, if the deal is called and replaced as STS, a non-STS investor may not like the tighter spread levels, but the deal may attract new investors such as insurers.”

The Rabobank analysts conclude that most of the uncertainty as to whether outstanding transactions can become STS-compliant is related to the requirement of no credit-impaired borrowers. The first point of this requirement refers to no insolvent debtors or debt restructuring within three years prior to origination, unless two specific conditions are met.

Stelios Papadopoulos

Structured Finance

SCI Start the Week - 8 July

A review of securitisation activity over the past seven days

Market commentary
Activity levels were high across the European ABS/MBS and CLO markets last week and they looked set to continue (SCI 3 July).

"It's very busy in both primary and secondary," confirmed one trader. "It feels like the usual rush before the summer holidays, but we're also feeling the effects of pent-up issuance from the quiet first quarter. We're seeing lots of new issues with different jurisdictions, collateral and deal types, as well as strong secondary volumes and plenty of bid lists across asset classes."

Despite the hefty supply, new deals and BWICs are trading strongly. For example, Green STORM 2019 priced yesterday with seniors coming in at MS+22bp - 5bp inside initial price talk - and SBOLT 2019-2 seniors came in at one-month Libor plus 120bp, in line with 120 area talk. Meanwhile, yesterday's bid lists went through at or around market expectations, keeping secondary spreads flat to slightly tighter on the morning's open.

Transaction of the week
Santander has issued a rare synthetic securitisation referencing a collateral pool of US prime auto loans. Dubbed Santander Synthetic Prime Auto Issuance 2019-A, the deal comprises CLNs referencing the performance of a static US$1.381bn portfolio of 59,771 auto loans made to high-quality borrowers across the US, for the purchase of new and used vehicles (SCI 2 July).

DBRS and Scope have rated four of the CLNs as A/A on the US$96.7m class Cs, BBB/BBB- on the US$60.783m class Ds, BB(low)/BB on the US$34.536m class Es and B(low)/BB- on the US$23.5m class Fs. Neither agency has rated the class A, B, G or H CLNs.

In the event of a performance-related subordination event related to the reference portfolio, the class A through to class G notes will be paid down sequentially. Likewise, net credit loss amounts on the reference portfolio will be applied on a reverse-sequential basis to the notes, starting with the most subordinate tranche.

Scope note that the "efficient synthetic structure" is a strength of the transaction, which works with "an immediate loss-determination mechanism reflecting Santander's IFRS 9 provisions". This mechanism is in line with the quick realisation of recovery proceeds, due to Santander Consumer USA's repossession and sales processes, in addition to limiting the counterparty exposure to Santander.

Potential transactional weaknesses include pro-rata amortisation and the portfolio of loans having a high average LTV of 96%. Likewise, Scope adds, the deal is weakened by Santander's ability to reclassify bankruptcy and failure-to-pay cases as restructuring - potentially leaving restructured loans in the reference portfolio, adversely impacting transaction performance.

Other deal-related news

• Dutch development bank FMO has signed a pilot bilateral risk-sharing facility under its NASIRA programme, which guarantees portfolios of loans to vulnerable, underserved entrepreneurs in sub-Saharan Africa and countries neighbouring Europe. The agreement is with Jordanian microfinance institution Tamweelcom and will support access to finance for Syrian refugee entrepreneurs (SCI 4 July).
• A notice of discontinuance from Greencoat Investments has been received by Business Mortgage Finance 6, purporting to discontinue its application for an administrative order with respect to the issuer, which had been listed to be heard before a High Court Judge at the beginning of July (SCI 16 April). This hearing has now been vacated and the application struck out with judgment, since the applicant failed to transfer £350,000 by way of security for the issuer's costs (SCI 5 July).
• The servicer of Elizabeth Finance 2018-1 has been notified that the mezzanine lender wishes to make a cure payment in respect of the outstanding loan event of default that occurred as a result of the loan to covenant breach under the Maroon loan. The cure payment has to be made by 16 July (SCI 4 July).
• Lloyds subsidiary Bank of Scotland intends to notify ESMA in respect of the STS designation of the notes in its Penarth Master Issuer credit card ABS programme. The bank has appointed PCS as an authorised third party to assess the compliance of the securitisation funded by the notes with the STS criteria for pre-2019 issuances prior to the originator submitting the STS notification (SCI 4 July).
• Lone Star is prepping a €458.9m RMBS, dubbed ERLS 2019-NPL1, backed by non-performing Irish residential mortgage loans and some first-charge performing loans. The mortgage portfolio to be purchased under ERLS 2019-NPL1 comprises part of the portfolio under ERLS 2017-NPL1 and the remaining from the part of the portfolios of LSF IX Java Investments and LSF IX Paris Investments (SCI 2 July).

Data

Pricings
The Independence Day holiday saw US ABS issuance take a bit of a breather last week. Meanwhile, European ABS began 2H19 with the busiest week in the primary market year to date.

Last week's auto ABS prints included A$500m Pepper SPARKZ Trust No. 1, A$400m Metro Finance 2019-1, €378.5m SapphireOne Auto 2019-1 and €1.25bn Silver Arrow Compartment 10. Other ABS pricings were US$222m CFG Investments Series 2019-1, €750m Limes Funding Compartment 2019-1 and £231.8m Small Business Origination Loan Trust 2019-2.

A handful of RMBS was issued: €388.1m Cartesian Residential Mortgages 4, €635m Green Storm 2019, €332m Shamrock Residential 2019-1, US$519m Starwood Mortgage Residential Trust 2019-1 and £500m Tower Bridge Funding No. 4. Finally, the sole CLO print was €407m CIFC European Funding CLO I.

BWIC volume

Podcast
The latest edition of the SCI podcast is live and includes discussions on recent structural innovations in US CLOs, the challenges firms face when trying to comply with the STS regulation and efforts to attract a broader range of Japanese investors to the US CLO market. Click here to listen, or search for Structured Credit Investor on Spotify or iTunes.

Structured Finance

Renewable debut

Green ABS could be first of many

Glennmont Partners has sponsored a debut securitisation backed by a portfolio of project finance loans tied to Italian renewable energy plants. It is hoped that the €51.472m transaction, structured and arranged by Natixis, will act as a catalyst for further securitisations of renewable energy assets.

The issuance comprises a €41.830m class A floating rate note and a €9.642m class B note, also floating rate. The proceeds of the issuance have been used to acquire a portfolio of project finance loan agreements from Banco Populare for the financing or refinancing of the construction or operation of a portfolio of eight wind farms and six photovoltaic plants.

Scott Lawrence, founding partner of Glennmont, says that the firm started around ten years ago and has established itself as an investor in renewable energy power plants, including solar and wind farms and biomass power stations. The firm utilises an owner-operator model and has a range of institutional investors including insurers, pension and endowment funds, which were also driving force behind this securitisation.

 “A few years ago” comments Lawrence, “our investors were asking us to consider investing in the debt side of renewable energy and so we thought about how we could partner with banks and this led us to look at securitisation.”

He continues: “We decided therefore to partner with Banco Popolare in this first deal which recycled assets off their balance sheet. We think it probably is the first such securitisation of Italian renewable energy collateral.”

Lawrence comments that they spent “a couple of years” on the strategy and that, while it didn’t present any surprises, “first transactions always have their challenges. There is no such thing as an easy deal.”  He notes that Glennmont has partnered with Natixis before in issuing a project finance bond.

Securitisation was selected this time, however, because of the firm’s desire to open up the “renewable energy space by utilising an established funding model” says Lawrence. As well as this he hopes that it will establish securitisation as a useful tool for renewable energy assets.

In terms of the potential for future transactions, Lawrence comments that the firm has a “pipeline of opportunities which we’re working on so there may be more developments in the near future. We also are happy to work with other banks that are interested in partnering on similar deals in the future.”

Likewise, he says that Glennmont aims to be at the forefront of the renewable energy space and to actively invest in debt and equity transactions backed by renewable energy assets such as wind, solar and biomass. He concludes: “Many of these assets have the potential to be included in other ABS and there is no reason why we won’t see further transactions of a similar type to our debut issuance.”

Richard Budden

Structured Finance

Green investment partnership launched

Company hires and sector developments

Green investment

Amundi and the EIB have signed a partnership to launch the Green Credit Continuum investment programme, which is designed to foster the development of the green debt market beyond the existing green bonds, supporting small-scale green projects and financing SMEs and mid-caps. The agreement has three components: a diversified fund will invest in green high yield corporate bonds, private debt and securitised debt; a scientific committee of green finance experts will be formed to define and promote environmental guidelines for these three markets in line with international best practice and European Commission legislation; and a green deal network will be put in place to source deals and projects. The programme aims to raise €1bn within three years, including a €60m initial commitment by the EIB.

CIRT pair closed

Fannie Mae has secured commitments for two new front-end Credit Insurance Risk Transfer transactions: CIRT FE 2019-1 and CIRT FE 2019-2 will cover up to US$14bn of loans to be acquired by the GSE between May 2019 through April 2020 and transfer up to US$455m of credit risk on those covered loans. With 19 insurers and reinsurers participating, coverage is provided based upon actual losses for a term of 10.5 years from the effective date of 1 May 2019.

CMBS

Newmark Knight Frank has hired Brooke Jackson to the roel of vp in its multifamily division in Chicago. Jackson was previously vp at SunTrust Bank where she worked on direct lending via Fannie Mae, Freddie Mac, HUD, Bridge and Construction loan programs. Prior to SunTrust, she was an analyst at Situs where she underwrote CMBS loans for various major lenders.

ILS

Carey Olsen Bermuda has promoted Gavin Woods to partner in its corporate practice. Woods - who joined Carey Olsen Bermuda at the beginning of this year - has nearly 10 years' experience in the Bermuda market, prior to which he practised in London and New York. He specialises in corporate finance, corporate structuring and insurance transactional and regulatory matters, particularly alternative risk financing vehicles, such as catastrophe bonds and ILS.

Investment partner appointed

Atalaya Capital Management has recruited Matthew Rothfleisch as a partner. With his experience in middle market distressed investing and more liquid strategies, Rothfleisch will complement Atalaya’s existing private investment capabilities and position the firm to capitalise on public market opportunities and future market dislocations. He previously worked with Atalaya ceo Ivan Zinn and other members of the Atalaya team at Highbridge Capital Management’s special opportunities business in 2002 as an md and portfolio manager. From 2005-2014, Rothfleisch was a partner and senior portfolio manager of Del Mar Asset Management and most recently, he founded Rotation Capital and served as its ceo and cio.

New CLO firm hires managing team

HalseyPoint Asset Management has boosted its management team with a number of senior hires in the form of Lee-Mike Zapata as md and head trader who joins from JPMorgan where he traded leveraged loans, HY and distressed debt, Francois Manivel as md and senior analyst from CVC, Chris Lyon, md and senior analyst, from BlackRock and Todd Solomon as md and senior analyst, who joins from Rothschild. HalseyPoint officially started operating 1 July and expects to issue its first CLO in 4Q19.

Capital Relief Trades

Risk transfer round-up - 11 July

CRT sector developments and deal news

Standard Chartered is believed to be readying a corporate capital relief trade that is expected to close this month. The bank’s last risk transfer transaction was completed in June and is a US$90m CLN called Chakra 3, which references a US$1bn portfolio of corporate revolvers (SCI 21 June). Additionally, Societe Generale is rumoured to be closing an SME CRT in September.

Nominations have opened for the inaugural SCI Capital Relief Trades Awards. Pitches are invited by 16 August. Further information and details of how to pitch can be found here.

Capital Relief Trades

SRT trio

Santander expands SME foothold

Santander has completed three SME significant risk transfer transactions that total €940.6m of tranche notional. This represents Santander’s largest total annual SME synthetic securitisation placement to date (see SCI’s capital relief trades database).

Jeremy Hermant, structurer at Santander, notes: “We continue to grow our SME issuance, while keeping the size of the balance sheet and the CET1 ratio under control. This includes Santander UK, which made a commitment to place SME origination at the core of its business.”

Santander is targeting an underlying return on tangible equity of 13%-15% and an underlying return on RWA of 1.8%-2%. The bank estimates that this should ultimately lead to a higher capital generation capacity, reaching a target CET1 ratio of 11%-12%.

This SME ramp-up has resulted in Santander’s first UK SME SRT transaction. Dubbed York 2019-1, the transaction references a £3.1bn portfolio (SCI 2 July). The amortisation structure is pro-rata, subject to performance triggers for the A to C tranches, but sequential for the D and E tranches.

Hermant explains: “Pro-rata amortisation keeps the cost of the protection stable over time by amortising higher cost tranches at the same rate as lower cost senior tranches. At the same time, performance triggers which switch from pro-rata amortisation to sequential mitigate the risk of back-loaded losses.”

Scope notes that the presence of pro-rata amortisation weakens tranche A and increases volatility for tranches B and C. However, the static and granular nature of the portfolio, along with the presence of performance triggers mitigates the risks. The 10 largest borrower groups account for only 4.85% of the portfolio and the static nature of the portfolio offers protection against adverse selection.

York 2019-1 features a portfolio weighted average life equal to 2.66 years, as well as a regulatory and clean-up call.

The reference loan portfolio is static and comprises 3,466 loans originated by Santander Corporate & Commercial Banking (accounting for approximately 87%) and Santander Business Banking (approximately 13%). The reference loan portfolio is mostly composed of term loans (approximately 77%), with the remainder being revolving facilities (approximately 23%). Secured loans represent approximately 85% of the portfolio.  

Additionally, the Spanish lender returned to the market with its third capital relief trade from the Magdalena programme. The €342m deal references a €2.85bn Spanish SME portfolio following the implementation of the 5% risk retention rule.

The portfolio’s weighted average life is three years and the replenishment period runs for six months. The transaction’s time call can be exercised after the WAL and replenishment period have run their course.

Finally, the bank printed its first Portuguese synthetic securitisation. Dubbed Syntotta, the €200m transaction references a €2bn Portuguese SME portfolio with a 3.69-year WAL and a one-year revolving period.  

Stelios Papadopoulos

NPLs

Spanish exposure

Rare NPL RMBS prepped

Rarely seen Spanish assets are behind the latest non-performing loan RMBS currently marketing. At the same time, price talk is out on the latest Irish NPL RMBS.

The dual-tranche Spanish deal, dubbed ProSil Acquisition, is backed by a €494.7m by gross book value (GBV) portfolio consisting of mostly secured non-performing loans and some residual unsecured loans. The receivables were originated by Abanca Corporación Bancaria and Abanca Corporación División Immobilaria. Cortland Investors II operates as the sponsor and retention holder in the transaction.

The majority of loans in the portfolio defaulted between 2010 and 2015 and are in various stages of resolution. The secured and unsecured loans are serviced by Hipoges Iberia.

Approximately 94% of the pool by GBV is secured, of which 95.3% benefit from a first-ranking lien. The secured loans in the portfolio are backed by properties distributed across Spain, with concentrations in the province of Pontevedra, Madrid and Barcelona.

The deal’s €170m class A notes have been provisionally rated BBB(low)/Baa3/BBB- by DBRS, Moody's and Scope. The €30m class Bs have a preliminary Ca rating from Moody's.

DBRS notes: “Interest on the class B notes, which represent mezzanine debt, may be repaid prior to the principal of the class A notes - unless certain performance-related triggers are breached.”

The capital structure also includes €15m class J and €16m class Z unrated notes.

Meanwhile, Lone Star has released initial price talk on its latest Irish NPL RMBS - ERLS 2019-NPL1 (SCI 2 July). The class A notes are talked at one-month Euribor plus low 200s, the class Bs at low/mid 400s and the class Cs at low/mid 700s.

Mark Pelham

Structured Finance

Senior CLO trader poached

Sector developments and company hires

CLO expert nabbed

BlueBay has appointed Alex Navin to join its structured credit team as pm. Based in London, Navin will report to Sid Chhabra, head of structured credit and CLO management, and will support him in managing BlueBay’s global structured credit strategies. Navin has nearly a decade of structured credit experience. He joins from Citigroup, where he held a number of roles, most recently as senior CLO trader. 

RMAC NODs received

The RMAC Securities No. 1 Series 2006-NS1, 2006-NS2, 2006-NS3, 2006-NS4 and 2007-NS1 issuers last week received notices of discontinuance (NOD) from Clifden, purporting to discontinue its Part 8 claim. The issuers had previously applied for a strike out and summary judgement of the claim, which was to be heard in the chancery division of the high court on 2 July. However, the issuers subsequently applied for an order that would either declare the NOD ineffective or have it set aside, until their applications were heard in court. Both applications were adjourned to a hearing on 19 July. Separately, the trustee of the notes (BNY Mellon) received a direction from Clifden purporting to be a noteholder and purporting to appoint Portfolio Logistics as agent of the trustee, together with Ruton Management and Kilimanjaro Capital Management as additional trustees. BNY Mellon states that it hasn’t received any evidence confirming Clifden as a noteholder and thus considers the purported direction wholly ineffective.

Structured Finance

Investment chief appointed

Sector developments and company hires

Business Mortgage Finance 6 update

Business Mortgage Finance 6, the issuer, has informed noteholders that on 4 July 2019 it issued a claim against the Issuer issued a claim against the following defendants in the High Court of Justice in London: Greencoat Investments, Greencoat Holdings Limited, Portfolio Logistics Limited, Alfred Oyekoya, Patrick FitzSimons and Maria Stoica. The claim seeks declarations that the actions taken by each of the defendants in relation to the issuer are invalid, including such things as the purported appointment of GHL and Portfolio Logistics as trustee in place of BNY Mellon and so on.

The issuer has also informed noteholders that the issuer has made a court application seeking an interim injunction to restrain each of the Defendants from holding themselves out as having the capacities listed above and having any authority on behalf of the Issuer. The interim application is listed to be heard on 11 July 2019. The issuer also states that the trustee wholly supports and endorses the claim and the interim application being sought.

The issuer also states that on 3 July 2019 GHL wrote to Target purporting to terminate its appointment as cash/bond administrator and special servicer under the terms of the master securitisation agreement dated 18 May 2007. GHL has purported to appoint itself as cash/bond administrator and special servicer in Target's place. As with the other steps taken by the defendants, these purported steps are wholly invalid, ineffective and abusive.

Middle-market cio appointed

MidOcean Partners has appointed Dana Carey as cio. Carey spent six years at Apollo Global Management where he served as partner in credit and global co-head of the performing credit business.

Receivables programme established

Finacity has launched a receivables securitisation programme for Green Network, a company headquartered in Italy, allowing up to €75m in funding based on yearly receivables flow of €600m for the next three years.

Risk transfer appointment

Allianz Global Corporate & Specialty (AGCS) has appointed Christof Bentele to a newly created position as head of global client management for its alternative risk transfer business. Based in New York and reporting to Michael Hohmann, global head of ART, he is responsible for driving the expansion of the firm’s ART solutions and services. Bentele’s previous role as AGCS head of global crisis management has been split into two positions: Björn Reusswig is appointed head of global political violence and hostile environment solutions; and Stewart Eaton is appointed head of global crisis management recall. The pair report to Chiara Brady, global head of liability, AGCS.