Contents

Structured Finance

Inequitable frameworks

Data analyses demonstrate punitive ABS treatment

AFME has published two independent data analyses, undertaken by Risk Control, in response to the European Commission’s call for advice regarding bank and insurance prudential capital treatment and the liquidity coverage ratio (LCR). Both reports demonstrate that the current European regulatory framework is disproportionately punitive for securitisation.

One of the Risk Control analyses examines the relative risk of European ABS tranches and covered bonds (CBs), drawing lessons about how insurer capital charges should be calibrated in the context of Europe’s Solvency 2 regulations. The other analysis examines the relative liquidity of senior ABS and CBs, based on bid-ask spread data on all securities in the two asset classes for which information is available on Bloomberg for the period 2010 to 2021.

The latter study essentially highlights how bank treasuries have been “substantially disincentivised” to hold ABS, according to Shaun Baddeley, md of securitisation at AFME. Indeed, while comparing the regulatory treatment between covered bonds and securitisation, the report unequivocally demonstrates how since 2016 senior ABS have provided equal or superior levels of liquidity compared to covered bonds. It further outlines how current bank regulatory rules, in the case of the LCR eligibility conditions, strongly favour covered bonds over ABS.

The report’s quantile approach - based on a transaction cost measure - evidences that senior ABS should be included within higher LCR categories than is currently the case. Baddeley also contextualises such relative market liquidity during crises.

He says: “In the context of the GFC, ABS was perceived to be an endemic issue. There was no liquidity in a product deemed to be a substantial actor in the crisis. However, during and following the pandemic, senior ABS have demonstrated comparable or favourable liquidity versus covered bonds - even through recent periods of relative stressed market liquidity.”

Similarly, the conclusions of the other study highlight how the prudential treatment under the Solvency 2 framework is disproportionately punitive for securitisation. A striking observation concerns the substantial gap between Solvency 2 capital charges and non-senior STS securitisation exposures - with Solvency 2 capital charges assumed to be double what is implied in the report’s calibrations.

“The natural bid for insurers would be the mezzanine tranches and this is where Solvency 2 is highly punitive. What Solvency 2 has done is that insurers will hold less capital on a whole loan portfolio, compared to a tranche deal,” states Baddeley.

He continues: “Clearly it must be an unintended consequence. From a credit perspective, there is more risk and less capital. How can that make sense?”

Ultimately, it is hoped that such independent analysis should facilitate a push towards a more equitable treatment of securitisation. Baddeley concludes: ““The prudential framework has not caught up. But this is an opportunity for regulators to adjust, reflect wholesale changes effected in the securitisation regulation and bring it to the 21st century.”

The deadline to respond to the Commission’s call for advice is 1 September.

Vincent Nadeau

ABS

Ratings cap?

Risks in BNPL-backed securitisations weighed

The buy now, pay later (BNPL) market is growing rapidly, matched by an evolving regulatory environment. While issuance of securitisations backed by BNPL assets is expected to rise in Europe over the coming years,  such transactions will bring their own analytical challenges.

BNPL is a form of consumer credit, whereby goods and services are paid for in instalments over a period typically less than 12 months, instead of being paid for in full at the time of purchase. Such borrowing is utilised in many retail stores for purchases and is generally interest-free, provided the customer pays instalments on time. The impact of Covid-19 drove a rising use of apps and online shopping - particularly during lockdowns - and this has more recently spurred a rapid growth of BNPL lending.

“Some people had fewer opportunities to go out and spend cash on things like services and going out for meals. As a result, online shopping increased. People doing more online shopping were then potentially introduced to these e-commerce options of buying goods with 0% interest via BNPL,” explains Doug Paterson, primary credit analyst at S&P.

There are a variety of different BNPL business models in the market and many traditional credit card lenders and banks are adapting their business models to compete. Some lenders and banks are offering structured instalment plans for some of their existing credit card borrowers and others are entering into partnerships with fintech companies and online retailers. Other banks are simply planning on launching BNPL services of their own.

“There's a good chance that it’s taking market share from credit card lenders and we rate credit card transactions, as well other consumer lending types,” observes Paterson.

The rating agency hasn’t yet rated a BNPL-backed securitisation in Europe. However, if it does, a ratings cap could be imposed on the deal.

“Operational risk, regulatory risk and just traditional credit risk are three of the main areas that potentially could result in a cap on a BNPL transaction. We also see the regulatory environment evolving very quickly,” explains Paterson.

For example, the UK FCA is developing new regulations for the sector that are likely to cover areas such as affordability assessments and credit checks. The treatment of customers fairly and in financial difficulties are also being prioritised, as well as the ability to take complaints to the financial ombudsman.

Advertising is another potential area that the FCA may move within the scope of existing rules on financial promotions, which are much stricter than the UK advertising standards. One of the key issues that the authority has raised is that consumers may simply be unaware that BNPL products are a form of credit and that the borrowing often isn't covered by the protections of a regulated service.

Another problem that consumers may face is the struggle to manage debt from multiple BNPL lenders. Further, some borrowers may claim that they were mis-sold these products or that they didn't realise they were accessing a form of credit, which could lead to retrospective claims.

“If the loans have been securitised, this could potentially result in set-off claims for the SPV. In terms of operational risk, one of the key aspects is just the lack of data. So, even though some of these lenders have been operating for five years or so, the majority have only been operating in very benign, low interest rate environments,” says Paterson.

A BNPL lender’s target market is of particular importance in this context. If they have a target market of borrowers with weak or limited credit records, including individuals that might not qualify for mainstream consumer loans or credit cards, that could affect the performance of the underlying assets in a securitisation.

Overall, BNPL lenders may lose some competitive advantage as a result of the regulation, in terms of their ability to out-compete traditional lenders that are already covered by the consumer credit legislation.

Angela Sharda

ABS

Window of opportunity

European ABS/MBS market update

This week is seeing clear evidence of a pickup in activity in the European and UK ABS/MBS primary markets. In what feels like an intermediate period of opportunity for issuers, the announcement of a flurry of transactions should test investor appetite and overall market conditions.

“After a period that saw huge levels of issuance for covered bonds, our market is finally on its way up,” notes one European ABS/MBS trader. “In the current environment, I think we should expect more primary deals to come.”

In this context, two auto ABS deals have been announced for this week – Bumper FR 2022-1 and Silver Arrow Compartment 14. Both deals will only offer their triple-A notes to investors, with pricing targeted for tomorrow and Friday, respectively.

Also slated to price this week is Blackstone’s new Italian logistics CMBS Cassia 2022-1. IPTs were released yesterday for the A-C tranches, at three-month Euribor plus 235-250bp, plus 350bp and plus 450bp, respectively.

Meanwhile, in the RMBS space, Crédit Immobilier de France Développement added to the longer-term pipeline with a new deal from its Harmony programme – a static securitisation of French prime first rank mortgages and guaranteed home loans. Both the A and B tranche will be offered and are set to price next week. Slightly less clear is a potential refinancing of Irish Prime RMBS Dublin Bay Securities 2018-1, with a deal notice published on Monday announcing the sale of the mortgage portfolio tomorrow.

In terms of the current pipeline, the trader states: “I think issuers will have to be prepared to pay a bit more compared to where they printed last time around. The last French deal (Harmony) landed at plus 31bp, and I expect at least 15-20bp more now. Same for Mercedes: last year they ended at plus 10bp. I wouldn’t be surprised – in line with the market – if it’s twice that now.”

The secondary market continues to see strong activity, the trader reports. "Every day we see some BWICS here and there and the execution is quite good. There has been some stabilisation is spreads in the past 2-3 weeks. Obviously, the market benefited from the lack of supply in primary.”

Looking ahead, the trader likens the ECB to a sword of Damocles hanging over spreads. “If the ECB is actually truly stepping away from the purchase programmes, then we are definitely not going back to the spread levels experienced last year. If you’re planning a deal this year, my advice is to do it as early as possible. I don’t see spreads going tighter anytime soon, unless the ECB decides to do a full 180,” he concludes.

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

Vincent Nadeau

Structured Finance

SCI Start the Week - 21 March

A review of SCI's latest content

Last week's news and analysis
Choice offering
Rob Reynolds, md and head of CLOs at Pemberton Asset Management, talks to SCI
Full stack guarantee launched
Millenium bank executes SRT
Room to run?
MDB CRT challenges persist
Some stabilisation
European ABS/MBS market update
Synthetic RMBS unveiled
Unicredit reveals capital relief trade
What makes an efficient CLO manager?
Phil Raciti, head of performing credit and a portfolio manager at Bardin Hill, explains

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

SCI CLO Markets
CLO Markets provides 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.

Recent Premium research to download
MDB CRT challenges - March 2022
A number of challenges continue to constrain multilateral development bank capital relief trade issuance. This Premium Content article investigates whether these obstacles can be overcome.
The rise of the ESG advisor - March 2022
ESG advisors are gaining traction in the securitisation market, as sustainability becomes an ever-more import consideration for investors and issuers. This Premium Content article investigates what the role entails.
CLO Control Equity - March 2022
CLO equity is back in vogue and is attracting attention for all the right reasons. As this Premium Content article suggests, for suitably prepared investors, taking a majority position can increase the benefits still further.
Stablecoin and securitisation - February 2022
Appropriate regulation of digital payment could pave the way for the issuance of securitisations in stablecoins. However, this Premium Content article argues that further standardisation across the blockchain ecosystem is needed for the technology to reach a critical mass.
US auto CLNs - February 2022
Santander’s recent auto CRT echoed those previously issued by JPMorgan Chase. This Premium Content article examines the similarities and differences between the transactions.

SCI Events calendar: 2022
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

STACR three

Freddie Mac completes Q1 CRT borrowing

Freddie Mac issued a US$1.8bn high LTV STACR transaction late on Friday via Bank of America and Nomura.

The bond, designated STACR 2022-HQA1, is the first high LTV deal that Freddie Mac has sold in 2022. It references loans put on in 3Q21 and completes Freddie’s credit risk transfer business for this quarter.

The GSE plans to sell another two DNA (low LTVs) and one HQA STACR deals in 2Q22.

The latest transaction consisted of five tranches. The US$534m M1A was priced to yield SOFR plus 210bp, while the US$491m M2A yields 350bp over SOFR.

The US$455m M2 tranche yields SOFR plus 525bp, the US$168m B1 yields SOFR plus 700bp and the US$168m B2 tranche yields SOFR plus 110bp.

The co-managers on the deal were Amherst Pierpont, JPMorgan, Societe Generale and StoneX.

Simon Boughey

Capital Relief Trades

Risk transfer round up-21 March

CRT sector developments and deal news

Santander is believed to be readying a synthetic securitisation backed by Portuguese corporate loans. The bank’s last such transaction was finalized last year and was called Castelo (SCI 4 August 2021).

Stelios Papadopoulos 

Capital Relief Trades

SME SRT disclosed

Last EFSI SRT revealed

The EIB Group and Banco Nazionale del Lavoro (BNL) have revealed a synthetic securitisation that both finalized in December 2021. Dubbed Minerva two, the STS transaction references a €1.4bn Italian SME portfolio and was the last significant risk transfer transaction under the European Fund for strategic investments (EFSI).

According to Karen Huertas, structured finance analyst at the EIF: ‘’Minerva two is one of the first synthetic operations by the EIF that received an STS label from a third-party STS verification agent under the new securitisation rules. The differences between the two Minerva deals are mainly structural and pertain to the STS status of the second. For instance, the performance triggers that switch Minerva two from pro-rata amortization to sequential.’’

The last Minerva transaction closed in December 2018. The latest operation from the programme features an approximately €20m retained junior tranche and a €94m mezzanine tranche. Further features include excess spread that is equal to the one-year expected loss of the portfolio and a two-year replenishment period.

Huertas notes: “the transaction with BNL enables the bank to free up capital to facilitate additional credit for SMEs such as new loans of up to €470m to Italian companies tackling the economic impact of the Covid-19 pandemic.’’

The EFSI is the main pillar of the Investment Plan for Europe. It provides first loss guarantees that enable the EIB Group to invest in riskier projects. The projects and agreements approved for financing as part of the EFSI have to date attracted investments totalling €546.5bn, benefiting more than 1.4m SMEs. Total EFSI financing in Italy currently stands at €13.3bn and has been used to activate €77bn in additional investments.

Stelios Papadopoulos 

Capital Relief Trades

Landmark SRT launched

mBank debuts polish synthetic ABS

mBank and PGGM have finalized a direct CLN backed by a PLN9bn portfolio of large, small and medium sized polish corporate loans. The transaction is the first Polish significant risk transfer trade sold to private investors as well as the first STS synthetic securitisation in the country.

The securitisation will help deliver the objectives of the bank’s strategy for 2021-2025 and support the development of its corporate and retail banking franchises, both of which are poised for future growth. Commerzbank is the lender’s strategic shareholder owning nearly 69.3% of shares.

According to Karol Prazmo, md, head of treasury and investor relations at mBank: ‘’With the average age of our retail clients at thirty-seven we are bound for continued growth. During the client life cycle revenues per customer peak only in the mid-to-late forties. Further, with a focus on high-potential companies and e-commerce, the corporate business is also very well positioned for the future. It’s important that we have the capital to serve those clients while managing our buffers.’’

From PGGM’s perspective, the trade offers an opportunity to diversify and access types of credit risk that aren’t available via public markets or other private market strategies.

Luca Paonessa, senior director, credit and insurance linked investments at PGGM: “This transaction marks the expansion of our credit risk sharing investments to a new market. It is of great importance to us to be able to do so in partnership with mBank, a dynamic and ESG-conscious organisation with arguably the youngest client demographic in Poland. mBank’s strong organic growth rate in recent years is underpinned by a clear focus on automation and digitalisation of its services.”

One notable feature of this SRT is the presence of a direct CLN structure which is heavily prevalent in the US market but not in Europe. Under this structure, notes are issued directly by the originator rather than an SPV. Santander became the first bank to use direct CLNs in the USA (SCI 5 July 2019).

More saliently, although Poland is a jurisdiction where the EIF has been quite active, it’s not a market that’s been on the radar for private investors, barring one unsuccessful attempt by Getin Noble Bank (SCI 16 February 2021). The mBank deal is the first Polish synthetic ABS sold to private investors.

‘’The private option - especially with a name such as PGGM - gives us both scale and flexibility, which were key priorities for the trade” says Prazmo.

Looking forward, he concludes: ‘’The first transaction was challenging, since we had to put in place all the required systems-including those pertaining to reporting and data. The team at UniCredit provided valuable expertise throughout the process. We’re proud of what we have achieved and the incremental costs of potential future deals will be lower going forward. If you look at our market share we are growing and have a sizable PLN200bn balance sheet.’’

UniCredit along with Clifford Chance and Linklaters acted as arranger and legal advisors respectively.

Stelios Papadopoulos 

Regulation

Lumpy SOFR

New Libor bill fails to clear up potential Libor versus SOFR mismatch

The signing of the Adjustable Rate Libor Bill (H.R.4616) into law eight days ago introduces important clarity into the Libor transition process, but the structured finance market is very far from out of the woods yet.

The bill creates a safe harbour for contracts lacking a specfied replacement rate for Libor and directs the Federal Reserve, when necessary, to determine a new benchmark rate. The Fed and its Alternative Reference Rates Committee (ARRC) favour the use of SOFR, but there are still many unanswered questions about how the substantial difference between SOFR and Libor will be reconciled satisfactorily.

“This statute is great thing, and it has solved many issues but it is not the end of the story,” says Amy Williams, a partner and structured finance specialist at Hunton Andrews Kurth.

Libor has many term periods, and while the CME has introduced a term SOFR contract, SOFR is an overnight index. There is also a growing disparity, between SOFR and Libor. Overnight Libor is currently 3.27bp and at the beginning of the month ago was close to 8bp. One month Libor is around 44bp. In comparison, overnight SOFR is at 5bp and hasn’t budged for weeks.

The Libor bill says that the fall back rate is to be used plus a spread from June 2023 when all contracts currently referencing Libor must be remarked to the new rate. All old GSE securities, all private label MBS deals and all CLOs which were sold as instruments priced against Libor are then forced to move to the new rate.

In its October 2021 paper, AARC used values calculated by Bloomberg in March 2021 to produce five year historical mean spreads between Libor and SOFR. One month Libor was determined to be SOFR plus 11.44bp, while three month Libor was plus 26.16bp and six month Libor was plus 42.86bp.

These rates look as if they will be imposed on all Libor fall back contracts when the venerable index finally expires next year, but there is significant potential for disappointment from either investors or issuers.

“Will it be closer to 11.44bp in June 2023? If so, the spread adjustment will feel fair. If not, it will not feel fair to investors or issuers depending on which way it goes,” says Williams.

It is also undecided which form of SOFR will be used in each type of contract. As SOFR is an overnight rate, there are various ways in which it is possible to arrive at a monthly rate to match Libor. It could be calculated using a compounded formula or by simply adding the overnight rate over 30-day period.

This is to be determined by the Fed in forthcoming regulation, but the latter could, for example, impose a different format in consumer loans to that of ABS products that reference those loans, leading to an asset/liability mismatch.

Consumer loans linked to Libor will be also be adjusted over a transitional period to avoid giving an unexpected and unpleasant jolt to borrowers, but this will contribute to the potential mismatch between assets and structured products.

“The interesting thing for structured products rather than loans is that I’m not sure anyone has done the work to find out what happens to these securities in the case of a basis disconnect. Is it clear in the indenture or trust agreement what is supposed to happen?” asks Williams.

The Libor bill was that rarest of animals in today’s DC: a law that achieved wide bipartisan support. It was passed 415-9 in the House, for example.

The bill’s sponsor was Representative Brad Sherman, a California Democrat, who also chairs the House Financial Services Committee’s Subcommittee on Investor Protection, Entrepreneurship and Capital Markets.

Introducing the bill on the floor of the House, he said it was the “the most important, genuinely boring bill that will come before this House this year.”

Few would perhaps argue. But for the investors, lenders and borrowers whose assets and liabilities are tied to Libor, the consequences of a shift to SOFR could be anything but boring.

Simon Boughey

Capital Relief Trades

Thoughtful approach

Olivier Renault, md, head of risk sharing strategy at Pemberton Asset Management, answers SCI's questions

Q: You joined Pemberton at the beginning of December to establish the firm’s new risk sharing strategy (SCI 1 December 2021). Can you provide some background to this move?
A: The aim of the risk sharing strategy is to leverage Pemberton’s strengths: we have significant origination and credit capabilities, with eight offices across Europe. Although the strategy is global in scope, European issuers account for around 80% of risk-sharing transaction volumes, so our European presence will prove extremely helpful in sourcing deals.

Pemberton has around €13.5bn in AUM, as of March 2022, the majority of which is in direct lending funds. Direct lending is a credit-intensive activity, and we have 18 credit analysts dedicated to the asset class.

Bolting on to this expertise will enable me to undertake transactions in both statistical and concentrated pools. And the advantage of having feet on the ground in eight locations is that a direct lending origination could lead to a capital relief trade (CRT) conversation with a client and vice versa.

We’re now in the process of actively raising dedicated money in significant risk transfer (SRT) transactions. Pemberton has a broad set of LPs already and so far I’ve been pleasantly surprised about their strong grasp of the SRT market. I’m also taking a systematic approach to issuers - I’ve spoken to over 45 banks already and many are expecting to issue SRTs this year.

Q: What are the risk sharing strategy’s key areas of focus?
A: In terms of asset classes, we will focus on our core strengths, which are in corporate and SME financing and trade finance/receivables. Over 75% of the credit risk transfer market is represented by corporate, SME, trade finance and consumer finance exposures, so that suits us fine.

From a US perspective, global large corporate deals - such as those issued by Citi and JPMorgan - are very interesting to us. We’re not the best bid for deals referencing retail assets - like autos and mortgages - or mortgage warehouse pools, where prices are in the mid-/single-digits.

The strategy will target first loss and junior mezzanine tranches. We could do some cash deals, but we’ll mainly concentrate on synthetic securitisations, which represent the bulk of issuance.

Q: How will Pemberton differentiate itself from its competitors in the risk sharing space?
A: We believe that the current environment is a great time to launch a risk sharing strategy. We’re starting with a blank sheet of paper - there are no legacy assets in the fund and we can exclude or reduce certain industry exposures that may be sensitive to energy prices or political volatility.

There are a few investors in the space now, but we believe that the combination of Pemberton’s credit expertise and my track record as originator and structurer is a compelling differentiating factor. I have been executing capital relief trades for over 15 years on the sell-side, so I can put myself in an issuer’s shoes and engage constructively with them.

For example, we’re not going to demand changes that would lead to a higher cost of capital for an issuer or mean that they are no longer able to meet the Basel 3 criteria. We want to bring a more thoughtful approach and, for instance, act as a trusted advisor for first-time issuers and guide them towards successful execution.

We saw eight first-time issuers enter the market last year. Getting an inaugural CRT over the line is time-intensive and so can be less competitive – issuers can test a trade with one or two investors, design a deal that works for everyone and investors can often achieve a larger allocation. As an issuer, if you’ve been through the hassle of persuading everyone internally to execute a CRT, you may as well establish a programme and use it as a tool and roll it out across different asset classes.

Q: Which challenges/opportunities do you anticipate in the future?
A: The era of zero losses is over. If the credit market starts to become a little more stressed, banks will have to begin making loss provisions and they will need to think about asset growth. This backdrop represents a good opportunity for us to invest in deals under a new set of conditions.

Effectively, CRTs are all floating rate and therefore provide natural hedges against rising interest rates. Historically, returns have been based on a combination of spread and pricing-in forward rates. For years, market participants have overestimated future rates.

Rates readjustment on the way up is potentially good news for investors. In terms of pricing CRTs, it’s no longer a matter of considering just supply and spreads.

The introduction of simple, transparent and standardised (STS) synthetics is also great news for the market and adoption of the standard has been strong so far. This is one of the reasons why more banks are tapping the CRT market, including standardised banks. An STS synthetics label is not an investment criterion for us, but if it makes CRTs economically viable for banks, that’s helpful for all parties.

This year, we expect to see more than 10 new banks enter the SRT market and over 30 issuers in total. Our analysis finds that the sector has grown by 15% per annum since 2010. On this basis and taking last year’s number of circa 65 deals for US$13.5bn in volume, we could see over US$15bn issued this year.

Corinne Smith

Structured Finance

Wrapped ratings upgraded

Sector developments and company hires

Moody's has upgraded the ratings of 148 classes of US structured finance securities wrapped by Assured Guaranty Municipal (AGM), Assured Guaranty (AGC) and their affiliated insurance operating companies, as well as one class of US securities wrapped by AGM. The securities impacted include certain RMBS and ABS notes. The move follows Moody's upgrade of the insurance financial strength (IFS) ratings of AGM to A1 from A2 and the IFS rating of AGC to A2 from A3.

Additionally, the rating agency has upgraded the ratings of nine classes of EMEA structured finance securities wrapped by Assured Guaranty UK (AGUK), including certain ABS, CMBS and repackaging securities. This action follows Moody's upgrade of AGUK’s IFS ratings to A1 from A2.

In other news..

C-PACE partnership inked

Nuveen Green Capital has partnered with real estate investment and advisory firm Clearwater Capital Management to expand Clearwater’s capital solutions offerings. Under the agreement, the two firms will launch Clearwater PACE, dedicated to C-PACE with the aim of more effectively meeting the rapidly growing demand for alternative financing solutions in the space.

Clearwater specialises in PACE financing across 26 US states, in addition to Washington, DC. C-PACE transactions across the US have eclipsed US$2bn and so far over 35 states have passed legislation to allow C-PACE financing.

EMEA

Federated Hermes has announced the hire of Christoph Lausecker as director on its private debt team. Lausecker will work across the private debt platform and focus on the German-speaking market, and will be responsible for developing the platform across the DACH region. He joins the international business from RiverRock European Capital Partners, where he advised on the RiverRock European Opportunities Funds in his role as principal of special situations credit. Lausecker has extensive experience in fund management and debt restructuring, he will be based in London and will report to Laura Vaughan, head of direct lending.

Schulte Roth & Zabel is set to expand its finance and derivative practice as it announces the hire of new partner, Martin Sharkey. Joining the firm’s London office, Sharkey brings over twenty years of CLO market expertise to the new role, with experience offering strategic counsel to managers, investors, and arrangers. Sharkey joins from Dentons, where he served as partner since 2016, and follows several other recent strategic additions to the firm’s practice. The team at Schulte Roth & Zabel hopes Sharkey will help develop its structured finance capabilities across the UK and US, and offer crucial cross-border expertise as the firm continues to expand.

North America

Clifford Chance furthers the expansion of its US structured finance business with the appointment of new counsel, Leah Feldman. Feldman will work across CMBS, RMBS, ABS and CLOs, and has extensive experience working across pooled conduits, single-asset and large loans, as well as both public and private offerings of the mortgage-backed securitises space. Feldman joins the firm in its New York office from Cadwalader, Wickersham & Taft, where she worked as an associate. With more than a decade of experience advising on structured finance, Feldman is the latest of several new hires as the international law firm works to grow its US securitisation business.

MidOcean Partners has made several new senior promotions across its credit team following on from a number of new hires at the start of the year. Robert (Tripp) Sullivan has been promoted to the firm’s investment committee, having been with the firm since 2016, and will continue to maintain his responsibilities as a portfolio manager for the firm’s opportunist and private credit strategies alongside his new duties. Additionally, Michael Levitin has been promoted to the position of portfolio manager, and will offer portfolio management and customised strategy across MidOcean absolute return fund alongside current portfolio manager, Ryan Dean. Finally, Carol Chung, Adam Goldberg, and Opal Leung have all been promoted to the position of principal, having been at the firm since 2012, 2017, and 2020, respectively.

Structured Finance

Secondary CLO equity fund launched

Sector developments and company hires

Accunia Credit Management has launched a CLO equity fund called King’s Garden. The firm is targeting an IRR of at least 15% over the fund’s lifespan by investing in CLO equity tranches in the secondary market.

The new strategy completes Accunia’s credit product suite aimed at family offices and ultra high net-worth individuals. The firm says it will start deploying the capital raised over the coming months. 

In other news…..

Elliott snaps up Enra

Enra Specialist Finance shareholders have entered into a definitive agreement to sell the firm to Elliott Advisors (UK). Completion of the transaction is subject to customary conditions, including FCA approval.

Founded in 2002, Enra is a UK non-bank mortgage lender, with a diverse property-secured lending proposition. Exponent Private Equity acquired a majority stake in Enra in 2017, with the current management retaining a significant minority stake.