Contents

Capital Relief Trades

Risk limits

US corporate SRT issuance to remain constrained

Issuance of capital relief trades referencing US corporate loans is likely to remain constrained, even though a small pick-up in volume has occurred since 2020 with transactions issued by JPMorgan, Goldman Sachs and HSBC USA. Such deals are expected to be driven less by capital relief requirements and more by considerations pertaining to limit relief, profitability and balance sheet growth.

According to David Felsenthal, partner at Clifford Chance: ‘’There’s talk about a pick-up in US corporate issuance, but it’s unlikely that the situation will significantly change. The focus has been on mortgage products, but we may see a pick-up in other classes, as the market develops and as corporates get better established.’’

Similarly, a structurer at a large US bank notes: ‘’US corporate SRTs will make up the second wave of the US CRT market, but we expect issuance to remain constrained. With warehouse loans, for example, there’s a lot of them and they aren’t unsecured exposures.”

He continues: “Loan growth has also been slow, so there’s no immediate need for corporates. You also must bear in mind that 90% of clients in Europe are IRB, but in the US it’s standardised.’’

Indeed, according to Federal Reserve data, total loans grew through May 2020 - boosted by commercial and industrial loans (C&I), loan commitment drawdowns and paycheck protection program (PPP) loan originations - but then declined 5% in the last half of 2020. The decline in loans stabilised in early 2021 and growth has picked up since then, including for C&I loans.    

Nevertheless, banks factor in the cost of issuing a CLN versus the cost of capital relief. For asset classes with relatively low default rates - like mortgages - that consume capital under the standardised approach, then synthetic RMBS, and similarly highly granular asset classes, are more economically efficient.  

Under the standardised approach, banks apply much higher risk weights for their underlying book, irrespective of the risk represented by those loans. The European approach, on the other hand, is more risk-sensitive. As a result of the Collins Amendment to the Dodd-Frank Act, the US has adopted the standardised approach as a binding constraint for most banks subject to advanced approaches.

The use of the standardised approach generates much thicker tranches. ‘’The primary difference between US and European CRTs is the thicker tranche requirement, but it’s important to note that they can also have greater loan diversification. Otherwise, the transactions are generally similar,” says Kaelyn Abrell, partner and portfolio manager at ArrowMark Partners.

Tranche thickness ranges from 0%-12.5%. The 12.5% thickness is the breakpoint under the standardised approach for getting the retained senior tranche to the 20% risk weight floor (SCI 29 October 2020).

Additionally, US corporate loans don’t benefit from the value chain that mortgages do. ‘’There’s a pool of mortgages that is warehoused, seasoned and then sold to Fannie Mae. It’s the same value chain. On the other hand, there’s no buyer base for corporate loans,’’ states one SRT investor.

A pick-up in US corporate capital relief trade volumes has occurred since 2020 - with transactions issued by JPMorgan, Goldman Sachs and more recently HSBC USA (see SCI’s capital relief trades database). Yet the motivations for such transactions are distinctly different to those for mortgage deals. US corporate SRTs are motivated more by limit relief, balance sheet growth and profitability, as opposed to pure capital relief (SCI 12 January). 

However, if profitability and balance sheet growth are set to drive issuance, banks will have to think about the integration of synthetic securitisations into their capital management frameworks. Angelique Pieterse, senior investment manager at PGGM, explains: “There’s certainly a big focus on return on RWA, but when capital gets allocated to business lines from the group level, most banks don’t look at what’s the most efficient way to use capital for that specific activity.’’

She continues: ‘’The cost of capital for lending books via credit risk sharing may differ significantly from alternative sources and improve efficiency, because capital amounts can be tailored to loan volumes in a flexible way. Using this tool would require integrating it into your capital management framework.’’

Another question is what the focus of potential corporate issuance could be. Some believe that mid-market loans are a good candidate, given large volumes and bank business tied up in that sector.

‘’The CLO market’s growth in the US illustrates how much corporate exposure is out there. I would eventually expect more middle market issuance, since banks have business capital tied up in that segment. However, it will likely remain restricted, with the main motivation being limit relief or rational economic risk management,’’ says another SRT investor.

However, other investors note that if the portfolios end up being non-granular pools, then the underwriting of the deals may be a challenge unless the underlying company data is available. Yet perhaps the biggest challenge in the US going forward remains the regulatory architecture. US banks have been unable to benefit from the Basel framework that was adopted in Europe over a decade ago and the regulation of banks remains split across several regulators, unlike the EU’s more unified framework. 

Stelios Papadopoulos

Capital Relief Trades

Trigger concerns

EBA complicates CRT thickness requirements

The EBA’s consultation paper on regulatory technical standards (RTS) regarding the specification of performance-related triggers for STS synthetic securitisations has largely been welcomed by originators (SCI 20 December 2021). However, one backward-looking trigger pertaining to the thickness of the protected tranche has raised eyebrows.   

The consultation stipulates backward- and forward-looking performance triggers that switch a synthetic securitisation from pro-rata to sequential amortisation. The former kick in when losses are higher than expected and the latter are introduced following rating downgrades in the underlying pool or PD increases.

Overall, the document has been welcomed by originators, but one backward-looking trigger – which targets the thickness of the protected tranche - has emerged as an issue. If, at any point in time, loss claims against the protected tranches consume more than 25%-50% of the nominal amount of the protected tranche, the amortisation structure automatically switches from pro-rata to sequential. The rationale here is to ensure that the tranches providing credit protection are thick enough to absorb losses that occur at the end of the transaction’s life.

This new rule appears too prescriptive from an originator’s perspective and fails to consider the peculiarities of specific portfolios. Indeed, how it will play out in practice will differ between IRB and standardised portfolios, granular versus non-granular and short- versus longer-term pools. Bank simulations are now being carried out to examine the impact for these different types of portfolios.  

Robert Bradbury, head of structured credit execution at Alvarez & Marsal, notes: ‘’The trouble with the fixed percentage is that it implicitly takes a view on an acceptable level of unexpected losses, which is a similar issue with the EBA’s CRT tests from the final report on SRT. Effectively, these features dictate a minimum level of thickness that must be covered for any pool, irrespective of the underlying risk.’’

The new tests - known as the principle-based approach (PBA) tests - stipulate minimum tranche thickness levels that would theoretically capture the bulk of expected and unexpected losses (ULs). They essentially imply that at least 50% of the regulatory UL of the underlying portfolio should be transferred to third parties. However, although this may seemingly make sense at first sight, the practical applications are more complicated (SCI 22 October 2021).

Bradbury continues: ‘’The lack of risk sensitivity is itself strange since, to an extent, it runs counter to the primacy of IRB models for securitisations. Additionally, if you have laid out minimum thickness levels as part of the CRT tests, then why add another trigger that aims to achieve the same goal. Overall, it’s not risk sensitive, and this kind of trigger may disincentivise the bank from buying protection in the first place for portfolios with certain risk and prepayment characteristics.’’

Jo Goulbourne Ranero, consultant at Allen & Overy, concludes: “On balance-sheet STS transactions are invariably also SRT transactions, but the performance triggers in the EBA SRT report differ from those in the STS RTS - which are also unhelpfully prescriptive. Grandfathering is another issue. It would clearly be inappropriate to jeopardise the STS status of existing deals for failure to incorporate triggers that post-date their execution.’’

Responses to the EBA’s consultation should be submitted by 28 February.

Stelios Papadopoulos

ABS

Electric avenue

Electric cars aren't as green as they seem

“Just because you have an electric car it doesn’t make you green,” says the head of liquid assets investment at a large public sector borrower in North America.

He manages a $45bn portfolio of which is between $5bn-10bn is devoted to AAA-rated structured finance products, and he was talking about the difficulty of scoring these deals according to ESG criteria.

While plain vanilla investments are relatively transparent and incorporate metrics that are easy to score, securitized products are far less so.

The exception is the auto loan market, in which deals are scored according to the rating of the sponsor, but, alas, transactions which securitize these assets are not what they at first appear.

Tesla is of course the runaway market leader in this sector, but he questions its green criteria. “Sometimes the broad public consensus is very different from the actual underlying ESG mechanisms that are in place,” he says.

The electricity needed for the cars to run is unlikely to be generated in a manner consistent with ESG criteria.  Moreover, battery production and disposal is generally a far from green procedure, he notes. Even though Tesla is moving to lithium-iron phosphate batteries, which can be recycled more efficiently and less harmfully, cobalt-aluminium batteries are still in use in longer range vehicles.

“All these things are not really accounted for. It’s easy to think Tesla is an electric car, it’s green, but Ford and GM are internal combustion vehicles so they’re not green. The reality is it doesn’t work like this,” he says.

 The company has also had, for example, well documented investments in cryptocurrencies. In April 2021 it disclosed it had invested $1.5bn in bitcoin, and realised a profit of $101m from bitcoin sales. At the end of Q3 2021 Tesla said its holdings of digital assets totalled $1.26bn.

Crypto mining is a hugely energy intensive procedure. In 2019, it was calculated that one year of bitcoin mining consumed more energy in one year as the Republic of Austria, and, two years on, its energy consumption is “much higher”, says the portfolio manager.

Tesla has also been less forthcoming than the IC car makers in reporting its Scope 1 and Scope 2 data, he says. These refer to direct and indirect emissions carbon figures. Ford has said it will be carbon neutral by 2050 and has specific Scope 3 targets in addition to Scope 1 and 2, while GM has committed to be carbon neutral 2040. Both firms have committed significant R&D funds to this purpose.

Structured finance products in general are resistant to ESG classification for a number of reasons. Firstly, sponsors are generally public companies are thus currently have fewer requirements to score their assets by to ESG criteria.

Perhaps more intractably still, structured finance bonds are backed by hundreds or thousands of different loans so to ESG scoring of each is tantamount to impossible. The one exception is the CLO market, where deals are generally backed by 20-30 loans.

Finally, there is a shortage of vendors to provide thorough ESG analysis for investors  - though this is changing.

Simon Boughey

Structured Finance

SCI Start the Week - 24 January

A review of SCI's latest content

Last week's news and analysis
Continued commitments
Deerpath Capital Management, answers SCI's questions
CREFC takeaways
Certain types of mall and certain types of hotel excite worry
How will the CLO market fare in 2022?
Vibrant Capital Partners shares how it expects CLOs to perform in 2022
Longer-dated profile
Project finance exposure embraced
Mortgage marvel
Sharp 2021 drop in foreclosure/delinquency
Primary primary
European ABS/MBS market update
Same as ever?
Reflections on the performance of the US subprime auto sector
SME mission
Alain Godard, EIF chief executive, discusses Europe's post-Covid recovery
STACR prices
Innovative double M-tranche STACR 2022-DNA1 sets coupons

For all of last week’s stories including ‘Market moves’ and ‘Risk transfer round-up’ click here.

SCI CLO Markets
CLO Markets is SCI’s new service providing deal-focused information on the global primary and secondary CLO markets. It offers intra-day updates and searchable deal databases alongside BWIC pricing and commentary. Please email Jamie Harper at SCI for more information or to set up a free trial here.

CRT Training
SCI  offers a Capital Relief Trades training course, providing complete, deep-dive intelligence on the CRT sector. Aimed at new market entrants, this is a fast track opportunity to get the intelligence you need on the Risk Sharing sector. The course will take place on the 8-9 March 2022, and will be held online.

To find out more about the course, the people who will be leading the training and to download a brochure, please click here or to book click here. If you’d like to discuss any aspect of this course please email David McGuinness at SCI here.

Recent Premium research to download
Irish & UK Banking Evolution - October 2021
Consolidation among lenders and the proliferation of fintechs is driving change in the Irish and UK banking sectors. This Premium Content article investigates the impact on the jurisdictions’ RMBS markets.

Defining 'Risk-sharing' - October 2021
Most practitioners agree that ‘risk-sharing transactions’ is the most appropriate moniker for capital relief trades, but there remains some divergence around the term. This CRT Premium Content article explores what it means for investors and issuers alike.

GACS, HAPS and more? - September 2021
Given the success of both GACS and HAPS in facilitating the development of a market for non-performing loans, and consequently bank deleveraging, could similar government-backed measures emerge in other European jurisdictions? This Euro ABS/MBS Premium Content article examines the prospects for the introduction of further national guarantee schemes.

SOFR and equity - September 2021
Term SOFR is expected to be the main replacement for US Libor. This SCI Premium content article explores the challenges the new benchmark presents to US CLO equity investors.

SCI Events calendar: 2022
SCI’s 1st Annual ESG Securitisation Seminar
16 March 2022, London

SCI’s 6th Annual Risk Transfer & Synthetics Seminar
27 April 2022, New York

SCI’s 3rd Annual Middle Market CLO Seminar
June 2022, New York

SCI’s 4th Annual NPL Securitisation Seminar
September 2022, Milan

SCI’s 8th Annual Capital Relief Trades Seminar
October 2022, London

Capital Relief Trades

SME uplift

Further details on Banco BPM SRT revealed

Further details have emerged in connection with Banco BPM’s significant risk transfer trade with the EIB Group (SCI 22 January). The €91m first loss guarantee references a static €1.57bn portfolio of Italian SME loans and will enable Banco BPM to channel €1bn into the Italian economy.

The guarantee supports the working capital requirements and investments of Italian SMEs hit by the economic crisis caused by the coronavirus pandemic. This is the first operation of this type in Italy and one of the first in Europe.

Funding for the transaction comes from the European Guarantee Fund (EGF), an integral part of the €540bn package of measures approved by the EU in 2020 specifically dedicated to countering the economic challenges caused by the coronavirus pandemic.

The transaction doesn’t feature any excess spread. ‘’Under the EGF and due to the emergency nature of the mandate, the EIF can take more risk in the capital structure of the transactions and invest directly in junior tranches without the presence of excess spread,’’ says Karen Huertas, structured finance analyst at the EIF.

She continues: “In exchange for the additional risk, BBPM has committed with the EIB Group to originate a new portfolio of loans to SMEs equivalent to 10.5 times the size of the junior tranche. This engagement enables additional lending with a financial advantage to Italian SMEs that have been impacted by the Covid crisis.”

The latest deal differs markedly to the Italian lender’s last SRT with the EIF. The last transaction was executed last year and was a mezzanine deal that did include excess spread (SCI 22 January 2021).

The trade was carried out under the Juncker Plan, so it only covered a mezzanine tranche. According to the terms of that agreement, Banco BPM had to originate new loans at six times the size of the mezzanine tranche. Much of the additional lending went to the most Covid-affected Italian regions, such as Lombardy.

Banco BPM has issued three capital relief trades until now and all have been with the EIF.

Stelios Papadopoulos

RMBS

Inflection Point?

European ABS/MBS market update

The European ABS/MBS primary market has been hit by macro volatility this week. While the previous week saw healthy investor demand and firm pricing (SCI 21 January), the current tense backdrop of central banks unwinding and major geopolitical tensions, appears to have affected spreads.

“The primary market has generally been very volatile this week,” notes one ABS/MBS trader. “Obviously, the trends seen in both equity and credit spreads, as well as the broader financial markets, have had a direct impact.”

He continues: “Investors are generally much more cautious and selective and that was directly felt in the Polaris deal.” Indeed, UK non-conforming RMBS Polaris 2022-1 exhibited a lacklustre performance following the release of initial price talk on Monday.

The deal priced yesterday wide from class A IPTs of mid-to-high-70s to print at SONIA plus 80bp – some 7-8bp outside of comparable prints just a week before – and the B notes followed suit ending at the wide end of IPTs at SONIA plus 135 bp. The tranches saw 1x and 1.2x oversubscription respectively.

“The fact it went out wider than IPTs – which is a first in a long time – is clearly not sending out a good message,” says the trader. “It feels as though we are at a point of inflection.”

In the CMBS space, Pembroke Property Finance 2 managed to achieve a more successful outcome. The triple-As were well covered – at a 2.6x oversubscription rate – landing slightly inside IPTs at a final coupon of three-month Euribor plus 145bp.

Unsurprisingly, the near-term new issue pipeline is looking pretty thin. Currently, it only holds UK BTL RMBS Canada Square Funding 6.

Looking further ahead, the trader emphasises the pivotal role central banks will hold. “Central banks will determine where we go this year. Tighter monetary policy is inevitable and as all central banks are moving in the same direction, rates will be higher and consequently spreads will widen.”

For more on all of the above deals, see SCI’s Euro ABS/MBS Deal Tracker.

Vincent Nadeau

CMBS

Multi-family moves

SitusAMC Insights speaks up on the US multi-family market

Senior director and head of SitusAMC Insights Peter Muoio and svp Jennifer Rasmussen give their views on the multi-family scene and CMBS market heading into 2022 

Q. What is the current picture in the multi-family MBS market and how do you expect it to look in 2022?

PM: The apartment market is in good shape fundamentally with strong investor interest. Investors see this and think this is a market with solid fundamentals. This will keep transaction levels high and suggests a high level of CMBS issuance for the multi-family side. In terms of volumes within the CMBS market, it may not be as strong as 2021 but it should still be a strong year in terms of transaction volumes.

JR: Investors are still sitting on a lot of dry powder and actively looking to deploy funds, which also bodes well for CMBS originations in 2022.

Q. What impact is Covid-19 having on the market?

PM: The initial impact of the pandemic was evident on areas such as New York City and San Francisco as there was a large outflow of individuals from those markets during the pandemic. They fit into two categories – young people who went back to their parents’ homes and people in wealthy urban areas who could go to their “vacation homes.” As we move out of the intense stage of the pandemic, we are seeing a reverse of this. In the third quarter, we have seen places such as New York improving too.

JR: The multi-family market has proven to be resilient in the face of Covid-19. Vacancy rates and rent growth dipped during the onset of the pandemic, but vacancy rates returned to pre-COVID levels in the third quarter of 2021 – effective rent growth and returns were at record levels. Garden apartments have performed exceptionally well during the pandemic.

Q. What challenges do you foresee for this space in 2022 and how can they be overcome?

PM: Investors need to assess the possible problems that could occur – the inflation question is one. Some inflation issues could prove problematic for the apartment segment – such as rising labor costs, which could have an adverse impact.

Rising interest rates, related to the higher inflation issue, could be an issue as they rise over the course over this year, but there is always the chance that events that weren’t expected at the start of the year could affect investment flows. Interest rates hikes could impact investment flows as we have seen in the past. We are running into a midterm election year in the U.S., and this reflects back to apartment affordability.

JR: Affordability is a popping up as one of the biggest concerns for borrowers and lenders. Luckily, there has been wage growth to offset some of the rise in rents. There are several challenges, but these headwinds are unlikely to stop growth in the sector in 2022.

Q. Geographically, where are you expecting strong returns for this market?

PM: The strongest returns have been in the Sun Belt States, which are benefitting from strong population growth and apartment demand arising from domestic migration trends. This is also true of the Mountain West.

JR: Rent growth was stellar in all regions in the third quarter, but particularly strong in the South.

Q. How does multi-family compare to other property segments in the US?

PM: The real king of the hill for a while has been the industrial sector. Shifts in retail spending from brick-and-mortar stores to more online shopping, which were well underway prior to the pandemic, have accelerated. This has spurred a massive increase in demand in industrial space for e-commerce logistics. The second element is the rise in data centers, and the combination of those has driven strong demand for industrial properties. This has led to strong fundamentals and robust returns. The jump in apartment fundamentals and returns places it closer to industrial in terms of strength.

The other two major property segments are less robust. While there are some moderate signs of improvement for retail, the reality is retail is facing many issues that even once the pandemic ends, people have gotten used to alternative shopping modes – for example, getting their groceries delivered. This will continue to inhibit retail conditions and returns. Office space is still an open question – we are all still working from home and the question of when people return to work there will likely be some hybrid office/remote model in action. This raises the question of what this means for space demand. Investors are all looking at the same thing – return metrics and what the future looks like for this segment.

Angela Sharda

Structured Finance

New members

Sector developments and company hires

DBRS Morningstar has appointed two new independent non-executive members to its board of directors – Joseph M. Donovan and Katherine L. Frey. Both industry veterans, Donovan presently serves in similar roles on the board of directors at STORE capital and Trip Rail Holdings. Frey previously held role of md at Moody’s, and before this worked on municipal finance, derivatives and leveraged loan markets as an investment banker at JP Morgan for over ten years.

In other news..

EMEA

Mayer Brown has promoted Neil Hamilton to partner within its banking and finance practice in London. With more than 25 years of experience across a wide array of asset classes, the firm hopes Hamilton will make not only a good addition to the structured finance team but enhance the growth of the firm’s practice. Hamilton joined the firm as a consultant at the end of last year, and prior to this served as partner at several firms including FisherBroyles, CMS UK, and Jones Day.

North America

King and Spalding has recruited another new finance partner, Sheel Patel. Joining the firm from Jones Day where he served as partner, Patel will join the firm’s corporate, finance and investments (CFI) practice group in the New York Office. With over 10 years of experience dealing with complex commercial financial transactions across several industries, the firm hopes the new hire will offer further value to its practice and expand its offering to clients.

Structured Finance

New hires

Sector developments and company hires

Greystone has announced several new senior hires as it continues to grow its CMBS platform. Jared Noordyk and Natalie Grainger will be joining the firm as head of securitisation and cco, respectively, and will report to head of CMBS, Rich Highfield Noordyk will join the firm from SitusAMC, where he served in a senior role for its CRE Advisory group working on securitisation and debt diligence. Grainger will join from Deutsche Bank, where she managed CMBS executions for over a decade. The pair will lead the platform’s proprietary conduit execution strategy for both multifamily and commercial assets.

In other news…

EMEA

Aeon Investments has recruited Khalid Khan to join its investment team as md. Khan has extensive experience, having previously worked at Pearl Diver Capital, Deutsche Bank and most recently Federated Hermes International. He joins the credit-focused investment company from Federated Hermes, where he managed structured credit portfolios including regulatory capital trades and CLOs as a senior credit structure. In the new role, Khan will manage existing credit portfolios in commercial real estate and SME lending, while also maintaining responsibility for originating and structuring new investments.

North America

IHS Markit has announced a partnership with Alpha Financial Software in a move to enhance trade support and add automated clearance and settlement for US agency MBS. Accessible through the thinkFolio investment management platform, IHS hopes the software will aid efficiency and thus allow for easier access for investors to the administration-heavy yet liquid segment of the fixed income market. The software will be integrated with the Alpha’s existing TBA Mortgage Master programme, which currently offers STP capabilities and automated workflows for US MBS.

Structured Finance

Impact investor acquired

Sector developments and company hires

M&G is set to acquire a majority stake in impact investor responsAbility Investments. Headquartered in Zurich, responsAbility has invested more than US$11bn in private assets across emerging markets since it was founded in 2003 and currently has approximately US$3.7bn of assets under management (as at year-end 2021).

The acquisition is in line with M&G’s strategy to grow its sustainable investment capabilities and become a leader in impact investing. It also expands the firm’s international presence and private asset origination capabilities.

M&G has agreed to acquire approximately 90% of the issued share capital of responsAbility and expects to acquire the remaining 10% in due course. responsAbility’s 200 employees will join M&G on completion of the deal and the business will continue under the day-to-day management of its existing team, led by ceo Rochus Mommartz.

The business will remain headquartered in Zurich and continue to serve its clients and portfolio companies across more than 70 emerging markets from its eight offices.

In other news…

EMEA

AllianzGI has announced the launch of its new private markets and impact unit as a part of its new sustainable investment platform. The new unit and its team of 12 will be led by global head of sustainable and impact investing at AllianzGI, Matt Christensen, who has also been appointed to the board of the GRESB foundation. Christensen will be joined by two lead portfolio managers, Martin Ewald, who leads the private equity impact investing team, and Nadia Nikolova, who manages the development finance and private debt impact investing team. The firm also announced the creation of an additional impact measurement and management team, which will be led by Diane Mak who joined AllianzGI from Y Analytics last year. Utilising expertise from across the company, AllianzGI will also launch an impact framework alongside this work to enhance due diligence and investment selection.

Ares has added three new senior professionals to its team as it strives to expand its real estate debt business across Europe. The team concentrates on originating and managing CRE loans, and joining it will be Philip Moore, Alessandro Luca, and Anisa Dudhia. Moore will serve as partner and head of the team and joins the team from the Carlyle Group’s credit opportunities fund, where he led on real estate investment ACTIVITIES across Europe and north America as md. Luca joins the firm from Goldman Sachs’ real estate finance team and will work as a principal. Finally, Dudhia will join the team as a vp and counsel as part of the Ares legal team, having previously been a member of Clifford Chance’s real estate finance team.

North America

ESMA has launched a public consultation on a targeted revision to its guidelines and recommendations on the scope of the credit rating agency regulation. ESMA is seeking input from stakeholders on its proposals to revise paragraphs 14 and 15 of the existing ESMA Guidelines.

The proposed revision is intended to provide greater clarity on the exemptions for private ratings under the CRA Regulation, and addresses: the interpretation of the terms “produced pursuant to an individual order” and “provided exclusively to the person who placed the order”; restrictions on sharing a private credit rating with a “limited number of third parties”; and how to monitor the distribution of private credit ratings by the ratings producer. The aim is to assist ESMA in its perimeter activities and define the activities of private credit rating providers that ESMA considers fall outside of the scope of the CRA Regulation.

The closing date for responses is 11 March and ESMA expects to publish a final report by the end of 2Q22.

The Loan Syndications and Trading Association (LSTA) has appointed four new members to its board – including two US CLO specialists Wynne Comer and Rachel Russell. Wynne Comer, who has worked as AGL Credit Management’s coo since 2019, will serve a two-year term on the board effective immediately. Additionally, Morgan Stanley’s head of CLO Syndicate - Rachel Russell – will also spend two-years as a member of the board.

Willkie Farr and Gallagher will continue the expansion of its global insurance practice with the hire of new partner, David Luce. Joining the firm’s insurance transactional and regulatory practice in New York, Luce is the latest hire to the firm’s global reinsurance practice having welcomed two new partners earlier this month to its London office. With over two decades of experience in insurance related transactions, regulation, and litigation, Luce will join the firm from DLA Piper where he also served as partner.