Contents

Structured Finance

SCI Start the Week - 12 September

A review of SCI's latest content

Don’t miss out on your chance to be recognised in the inaugural SCI MM CLO Awards! The submissions deadline is 20 September. For more information, click here.

Last week's news and analysis
Full stack SRT prepped
BDK readies capital relief trade
Improved expectations
Moody's raises EMEA corporate outlook
Reinsurance roll call
Call for new counterparties to avoid CRT overcapacity and widening prices
Risk transfer wave
Leveraged loan CRTs pick up
Setting the tone
European ABS/MBS market update

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 David McGuinness at SCI for more information or to set up a free trial here.

Recent premium research to download
Japanese SRT prospects - July 2022
Japanese banks have historically been well-capitalised, but implementation of the Basel output floors could change this. Against this backdrop, this Premium Content article investigates the prospects for capital relief trade issuance in the jurisdiction.
Australian securitisation dynamics - July 2022
In contrast to Europe and the UK, the Australian securitisation market is continuing to see healthy issuance activity, despite the country dealing with the same inflation and rates pressures as the rest of the world. This Premium Content article investigates why it’s always sunny Down Under.
Container and Railcar ABS - June 2022
Global supply chain issues could continue to support US container and railcar ABS. However, as this Premium Content article shows, both markets are facing challenges on other fronts.
CLO Migration - June 2022
The switch from the Cayman Islands to alternative domiciles, following the European Commission’s listing of the jurisdiction on the EU AML list, appears to have been painless for most CLOs. This Premium Content article investigates.

SCI events calendar: 2022
SCI’s 8th Annual Capital Relief Trades Seminar
20 October 2022, London
SCI’s 3rd Annual Middle Market CLO Seminar
15 November 2022, New York

Capital Relief Trades

Risk transfer round up-12 September

CRT sector developments and deal news

BCP is believed to be readying a synthetic securitisation backed by Portuguese SME loans alongside a CRT backed by a polish portfolio (SCI 1 August).

Meanwhile, BNP Paribas is allegedly arranging a synthetic securitisation of commercial real estate and project finance assets for LBBW.

Stelios Papadopoulos

Capital Relief Trades

Full stack SRT priced

BDK prices SRT as banks diverge on excess spread

Bank Deutsches Kraftfahrzeuggewerbe (BDK) via its arranger Societe Generale has priced its latest full stack capital relief trade from the Red and Black programme (SCI 9 September). Meanwhile BNP Paribas is marketing the latest full stack CRT from the AutoNoria programme called AutoNoria Spain 2022. Both transactions feature lower levels of excess spread given higher hedging costs, but each lender has tackled this issue very differently.

Red and Black Auto Germany nine as the BDK deal is called features Class A notes (priced at one-month Euribor plus 56bps), class B notes (190bps), class C notes (270bps) and class D notes (560bps).

Societe Generale who acted as the arranger in the deal opened books on Monday and marketed senior and mezzanine tranches. Spreads are now wider compared to where they were in 1H22 while rates are now positive in Europe. Consequently, this makes ABS attractive following a limited supply in 1H22.

Red and Black Auto Germany nine features lower levels of excess spread compared to previous trades from the programme. Indeed, interest on the fixed-rate assets of the Red and Black portfolio has remained largely constant, whereas the weighted average costs of funding on the notes and hedging costs have increased compared to predecessor deals. As a result, excess spread levels have been lower relative to past securitisations from the programme.

However, the reduction in excess spread has been somewhat offset in the structure via a higher cash reserve. The approach taken by Societe Generale markedly differs from that taken by BNP Paribas in the new AutoNoria transaction.

AutoNoria Spain 2022 is a revolving securitisation of a portfolio of fully amortising auto loans originated in Spain by Banco Cetelem. Cetelem is a specialist lender fully owned by BNP Paribas. The French lender is acting as the arranger in the deal. The transaction is being rated by Fitch and Moody’s with tranche sizes and pricing still pending.

Tom Deacon, director at Fitch comments: ‘’The cash reserve in the Autonoria trade partially compensates towards the tail when the weighted average cost of funding goes up, but it’s not the main mitigant. Principal borrowing would be the main line of defence if excess spread turned negative. Moreover, the eligibility criteria have been adjusted to raise rates on the underlying exposures.’’

Paula Nafria, structured finance senior analyst at Fitch concludes: ‘’there aren’t that many major differences compared to previous AutoNoria transactions, yet there’s an evolution in the asset composition, given the inclusion of more used cars rather than new ones in the pool. This is due to the issues around semiconductor prices and the state of the car market in Spain.’’

Stelios Papadopoulos

CMBS

CMBS sickness

Rising rates imperil issuance and refinancing

CMBS issuance is expected to be down for the foreseeable future due to higher rates, wider spreads and difficulties with refinancing, according to a new report from Moody's.

There have been only three multi borrower conduit deals this quarter, with perhaps another one or two expected before the end of 3Q. There were 33 deals in 2021 for a total dollar value of $33bn, but just 18 deals so far this year for a total dollar value of $18.2bn.

Things got worse yesterday (September 13) as August CPI was reported to have risen 0.1%. Analysts now suggest it is far from impossible that the Fed will raise rates by a full 100bp at this month's FOMC meeting. Ten year Treasury yields have backed up by 10bp from the end of last week to 3.43%.

 "Last year sellers and buyers were meeting on price but with this year's rate increase a lot of buyers want to buy at property yields at over 6%, while sellers believe their properties will see higher income and want property yields lower than that. There is no meeting of minds," says Darrell Wheeler, senior credit officer with Moody's in New York.

Benchmark rates have increased nearly 200bp this year, while spreads have ballooned, notes Wheeler. A multi borrower conduit deal brought at the end of last year recorded spreads of 55bp over swaps for the super senior tranche and plus 355 for the BBB-rated tranche.

A similar deal brought on August 16 came in at double these levels. The super senior tranche came in at SOFR plus 152bp while the BBB tranche came in a plus 645bp. Those levels have subsequently stabilised but have not contracted significantly and are not likely to entice new borrowers.

The rise in rates has made refinancing an appreciable burden for maturing commercial real estate borrowers.  In 2Q 2022, only 73.5% of maturing mortgages refinanced before maturity, a drop of 11.2% from the previous quarter, notes Moody's. These numbers are likely to get worse.

If mortgage coupon is 8%, the share of loans with a high refinancing risk increases to 35.4% in 2022 and 33.3% in 2023.

"Borrowers have seen such a rates move in 2022 so they've probably inclined to wait till the last moment. It's a difficult time to be a borrower," says Wheeler.

If they are unable to refinance through traditional routes borrowers will have to turn to other, more costly alternatives, or risk losing their properties.  They will have to call upon investors for more equity, or preferred unsecured loans, or a traditional secured loans combined with equity. All of these will be considerably more  costly for borrowers.

Simon Boughey

Simon Boughey

Insurance-linked securities

Rare sighting: the lesser spotted MILN

Essent re-opens the MILN market after five-month layoff

Essent Guaranty is in the market with the first mortgage insurance-linked note (MILN) since April.

Dubbed Radnor Re 2022-1 Ltd, the deal consists of an M-1A tranche rated Ba2 by Moody’s and an M-2A tranche rated B1.

Following the example of the GSEs, it seems B class securities are no longer on offer.

The securities reference a pool of insurance policies written by Essent Guaranty, on a portfolio of mortgage loans predominantly acquired by Fannie Mae and Freddie Mac, and originated and serviced by multiple entities.

The last MILN was the $474m Home Re 2022-1 issued by MGIC Investment Corporation in April, and the only other deal sold this year was the $282m Bellemeade Re 2022-1 from Arch in January.

In contrast, there were 14 offerings in 2021 with an overall dollar value of $6.3bn. However, spreads have widened sharply in the MILN market over the last eight months.

This has deterred many of the regular borrowers, and they have turned instead to the reinsurance market.  Arch is also said to be preparing another Bellemeade deal which will be launched soon, but, say onlookers, issuance by these names is based more on a commitment to the market and a wish to retain investor contact rather than strictly economic rationale.

Simon Boughey

Structured Finance

Branching out

Thomas Majewski, managing partner and founder of Eagle Point Credit Management, answers SCI's questions

Q: Eagle Point recently announced its expansion into the ABS, MBS and SRT markets, which will be led by Karan Chabba as head of ABS, MBS, SRT and speciality finance (SCI 19 July). What were the motivations behind branching out into these markets?
A: In terms of relative interest, the order we are looking at these is SRT, ABS and then MBS. We have been studying the SRT market for many years and were close to entering the market a couple of times, but never fully dove in. As we look at the broader dislocation going on in the markets currently and our expectation that volatility will likely persist over the medium term, it feels like an opportune time to be ramping up a portfolio in that strategy.

At Eagle Point, we have invested in a number of SRT transactions on a smaller basis and SRT has a lot of similar attributes to CLO equity, in terms of being a residual cashflow - although it does have some differences as well. As we have studied the asset class and worked to understand how issuers use the market as a sort of just-in-time capital solution, we think it presents a very attractive investment opportunity and a nice complement to our broader CLO strategy.

We believe that the investment opportunity also aligned very well with the core competencies of Eagle Point, which are proactive investment sourcing, structuring expertise and collateral evaluation. So, that is really our starting point on SRT.

Where Karan - who we have appointed as the head of ABS, MBS, SRT and speciality finance - holds a great deal of investing experience is in private asset-backed transactions with more bespoke transactions on a bilateral basis, with individual companies that are in need of financing and typically have a pool of financial assets to pledge. Karan has an excellent track record with over a decade of both originating and investing in these transactions, so we are very pleased to have that in our wheelhouse.

Looking at Karan’s investment experience, he has shown over the years a real ability to toggle between the US and European markets too. While most of what we do is US-centric, there are occasions in which we look to capitalise on some interesting opportunities in Europe, which ultimately Karan has a deeper set of skills to be able to identify and consider the relative value of opportunities overseas.

Q: What makes now the right time to branch out into ABS, MBS and SRT?
A: The main ramification of quantitative tightening – or negative quantitative easing – is that the largest investor in the world had been buying for a long time, but now it is selling. While the market has rallied back somewhat, if you think about the US loan market as an example, just weeks ago it was pricing in at a 15% default rate over the next two years.

While that is improbable to happen, the US Fed slowly letting the air out of the balloon has created a price distortion that’s not warranted by the credit risk, but instead is warranted by the fact that the Fed is moving from a buyer to a seller. So, as we look at opportunities, that’s usually a great time to get started – when people are selling for reasons other than the fundamental merits of the investment.

Q: Looking forward, what do you hope is Eagle Point’s role in the ABS, MBS and SRT markets?
A: It is a medium-term instrument, and I expect it to be a permanent part of our investment strategy. While sometimes markets will be richer and other times cheaper, after having studied the SRT market for well over a decade, I think you really would have struggled to find a bad time to get involved. Whether rates were up or down, or whether markets were raging or limping, if you had the benefit of medium-term or permanent capital, we think it fits very well into our broader structured credit investment set.

We are very focused on investments that are in inefficient markets, generate high current income and earn a complexity premium. Over the last decade, investors have come to expect us to deliver unique opportunities that are often overlooked by others and sometime do not fit perfectly in most institutional investors’ asset allocations.

CLO equity and CLO double-B debt are great examples of investments that deliver high current income and are broadly misunderstood by many investors. The SRT asset class shares many of these same qualities, despite both CLOs and SRT having a very good track record.

Q: What role do you expect synthetics to play in the business going forward?
A: Being involved in synthetics themselves is not an objective; it is more a result. We are not seeking to get exposure synthetically. We like the embedded terms and the structural leverage – we don’t need to juice it on the side with synthetic leverage where possible.

The dynamic of all the SRT securitisations is synthetic and, if anything, it’s a slight drawback being an unsecured creditor of a bank if things do go haywire. But, it’s still a reasonable cost towards what is overall an attractive investment product. Bottom line, our goal is to generate the best risk-adjusted return for our investors - whether that be via cash or synthetically, as long as we have a comprehensive understanding of the risk. 

Q: How do you expect branching out into SRT, ABS and MBS will impact the existing CLO business?
A: It is certainly not a negative impact, and really any impact would be positive because it’s just a natural evolution and continuation of our investment strategy. We believe we are the largest holder of CLO equity in the world at this point – we control about 5%-7% of the market – so we are well ensconced there.

That standing in the CLO market helps us get access to the SRT transactions too. Like the CLO market, the SRT market is a relationship market as well. There are some intersections between the pair, which have helped us become a more meaningful participant in the SRT world and a trusted partner to the banks issuing SRT.

Q: How do you see Eagle Point’s place in the CLO market in the coming years?
A: I think we’ll very much continue to be a thought leader within the CLO market. We’ve done this long enough to know things get choppy every two to five years, and you never know exactly why or for how long things will last, but having the right long-term minded capital base allows us to outperform.

The nice thing is that as a CLO equity investor, while some others may invest in shorter-dated CLOs closer to the end of the investment period - or maybe even amortising - we give a lot of credit to buying CLOs with a long reinvestment period. Right now, we are savouring that – the average triple-A financing level for our CLO equity book is approximately 125-over, although new issues were clearing at 225-over as of a few weeks ago.

You couldn’t recreate the financing of our portfolio, and in my view the CLO market doesn’t give sufficient credit to the ‘in-the-moneyness’ of the CLO debt financing in existing CLOs. We didn’t do anything intricate with the CLOs we issued last year. We just created and reset a bunch of CLOs last year, with long reinvestment periods and triple-As at approximately 125-over. In fact, we believe that Eagle Point was the most active participant in the refinancing and reset market last year. 

Many people like to talk about defaults in the CLO market. But in my opinion, what is far more important is: what’s the prepayment rate going to be? How much are loans repaying?

The long-term average repayment rate for US syndicated loans is about 35% per annum. Even in choppier markets, you still see 15% for repayments - and in a world like we are in today, where you can reinvest it and capture some discounts to par, it may be three to six cents of upside to par.

Everyone has a few mistakes or problems in a portfolio, but the ability to make back any losses - by investing the proceeds back into a discounted market - is as good as can be. Our role is to make sure our CLOs are at the leading edge of that and have the most flexibility possible to capitalise on it.

At the same time, they’re benefitting from long-term capital and we have a public fund - which trades on the NYSE under the ticker ECC - which is a permanent capital vehicle, which offers us a ready source of capital at all times to continue investing and buying what others are selling. Then, because that fund has no right of redemption for the shareholders, we are able to invest without worrying about getting money back to people by 30 September - which makes it a lot easier.

On the market, what I would say is that I do think the market is oversold. Although defaults are close to zero, they can only go up, but they can’t really go down.

Overlay the technical of the Fed selling - it’s always good to be a buyer when there are other people motivated to sell and we’re happy to be that buyer. Things could go down from here – but things are at pretty attractive levels right now, so I think there’s only more good opportunities to come.

Claudia Lewis

Structured Finance

Multifamily JV poaches CBRE team

Sector developments and company hires

Multifamily JV poaches CBRE team
A veteran equity, debt and structured financing (EDSF) team, led by vice-chair Craig Branton, has joined Cushman & Wakefield and Greystone Servicing Company in Denver, Colorado. Previously with CBRE, the three-member EDSF team also includes director Chris Bourgeois and financial analyst Brett Brown. Working in a dual capacity at both Cushman & Wakefield and Greystone Servicing Company, the team will specialise in multifamily loan originations, providing financing solutions for commercial real estate investors and owners.

In December 2021, Cushman & Wakefield finalised its strategic investment of US$500m in Greystone, acquiring a 40% stake in the firm’s agency, FHA and servicing businesses (SCI 22 October 2021). The EDSF team will also focus on helping to grow the joint venture.

In other news…

EMEA
Pan-European mid-market private debt investor Apera Asset Management has recruited Jodie Tilley to spearhead investor relations for the firm as it continues to grow. She joins Apera with over a decade of experience in sales and distribution across financial markets, most recently as a placement agent with Alvine Capital, where she focused on private credit.

Financial services regulatory lawyer Karen Butler has joined DLA Piper as a partner, based in London. She was previously a partner at Reed Smith and before that, worked at King & Wood Mallesons, Linklaters and Clifford Chance.

Squire Patton Boggs has appointed Leona McManus as a derivatives and structured finance partner in its London financial services practice. McManus joins the firm from Shearman & Sterling, where she was counsel in the derivatives and structured finance team. She has over 15 years’ experience in financial services, focusing on English law derivatives transactions, as well as complex and bespoke structured finance products.

North America
Golub Capital has named Alan George head of structured products. Based in New York, he was previously md, structured products at the firm, which he joined in January 2008. Before that, George worked at ABN AMRO LaSalle Bank and Fifth Third Bank.

Former Goldman Sachs CMBS trailblazer Mark Buono has joined SEDA Experts as md and expert witness, based in New York. Buono brings not just his CMBS expertise to the new role, but extensive knowledge across CRE CDOs, REITs, CRE portfolio management and risk management too. Having spent much of his career at Goldman Sachs, most recently serving as md, SEDA Experts hopes Buono’s addition will be an asset to the firm and clients in CMBS litigation disputes.

STACR strikes again
Freddie Mac is in the market with its sixth low LTV STACR deal of the year, designated STACR 2022-DNA6. The deal will consist of four tranches - M1A, M1B, M2A and M2B, with ratings of single-A, triple-B plus, triple-B and triple-B minus respectively. In keeping with recent STACR and CAS deals, no B tranches will be sold.

The reference pool comprises 112,865 prime mortgages with an unpaid principal balance of US$35.6bn. The weighted average LTV is 74.4% and scheduled final maturity is 2042.

Structured Finance

Apollo's Harris launches alternatives shop

Sector developments and company hires

Apollo’s Harris launches alternatives shop
Apollo Global Management co-founder Josh Harris has launched 26North Partners, an alternative asset management firm that aims to generate compelling returns across asset classes and capital structures for its partners. The firm has more than US$5bn in assets under management and will initially focus on private equity, credit and insurance solutions.

Mark Weinberg, who previously led US private equity at Brookfield Asset Management, will join 26North next year to lead its private equity platform. Brendan McGovern, former head of Goldman Sachs Asset Management's private credit group, will lead 26North's direct lending platform.

The pair join more than 40 team members, including former Centerbridge and Goldman Sachs partner Lance West, former Apollo md Evan Zemsky, former Blackstone md Tina Raja and former Security Benefit Life executive Cole Charnas.

26North has also formed a joint venture with Braven Management, a firm led by William Abecassis, the former head of Blackrock's venture group Innovation Capital. The JV seeks to leverage Braven's expertise and access to transformational technology to enhance 26North's investment and operational strengths.

In other news…

Analytics provider acquired
Fitch is set to acquire the data and analytics provider dv01, which will operate as a subsidiary of Fitch Solutions. The acquisition is expected to close at the end of Q3 and is expected to enable the development of new products and expansion into new markets. dv01 has offered both loan-level data and fully integrated analytics through it cloud-based platform since it was founded in 2014, supporting clients in establishing integrity, improving efficiency, and distributing market research across an array of asset classes.

Direct lending service snapped up
KBRA Analytics has acquired Direct Lending Deals (DLD), a digital information service that provides investors and originators with the latest deal data, news and analysis in direct lending. Founded in 2019 by Kelly Thompson, Chicago-based DLD focuses on private equity-driven financing in the lower and middle markets, as well as private jumbo loans sized at US$1bn or more. DLD recently hired Rachel McGovern, editor and European bureau chief based in Dublin, Ireland, to launch coverage of the European direct lending market.

EMEA
Melissa Bockelmann has joined WhiteStar Asset Management as md, head of business development Europe, based in London. She was previously in the leveraged finance structuring team at M&G Investments and worked at Cairn Capital, 3i Group, Bank of America and AXA Investment Managers before that.

North America
Waterfall Asset Management has announced the promotion to partner of two New York-based mds - Lee Wong and Keerthi Raghavan. Wong joined the firm in 2007 and most recently served as head of loan strategies and as a member of the Waterfall investment committee. Raghavan, who joined Waterfall in 2014, served on the firm’s investment committee and after led its bond trading strategy, focusing on investments in ABS, CMBS, RMBS, CLOs and corporates.

TPR approval granted
Sutherland has been approved as a third-party review (TPR) firm by Fitch. The digital transformation company’s innovative mortgage services work with lenders to transform their mortgage operation by introducing more efficient and more intelligent mortgage processing across multiple areas, including underwriting and servicing. Fitch’s assessment offers Sutherland an ‘acceptable’ rating as a TPR firm, allowing investors greater trust in the RMBS ratings provided by Sutherland as a part of its array of mortgage services.

Structured Finance

Controversial Revlon decision reversed

Sector developments and company hires

Controversial Revlon decision reversed
The US Circuit Court for the Second Circuit last week reversed the controversial decision by the District Court for the Southern District of New York (SDNY) that permitted lenders to retain the mistaken payment made by Citi as administrative agent for a credit agreement with Revlon (SCI 20 August 2020). The SDNY decision upended decades of loan market practice that mistaken payments are routinely returned. It also led the LSTA to develop a widely-adopted standard erroneous payment provision for credit agreements, designed to prevent such situations from occurring again.

On 11 August 2020, Citi intended to make an interest payment on the Revlon credit agreement, but mistakenly wired almost US$900m - representing the full amount of the interest and principal outstanding - of its own money to the lenders. Although many lenders returned the funds, several did not, invoking the ‘discharge for value’ defense that permits recipients of mistaken payments to retain such funds under limited circumstances.

The Second Circuit’s opinion held that the lenders could not rely on the discharge for value defense because they had ‘constructive notice’ of the mistake and because it does not extend to loans that are not yet due. The LSTA notes that the Second Circuit’s decision conforms to long-standing market norms and, together with its new provisions, will result in a return to certainty for the disposition of mistaken payments.

EMEA
DLA Piper has appointed a new legal director to its finance, projects and restructuring team in Johannesburg, South Africa. Amelia Heeger joins the team with more than 20 years of experience in multiple financial mandates, including securitisation. Previously, she was a freelance legal advisor, having been a partner at Baker & McKenzie.

Structured Finance

Dignity Finance restructuring mooted

Sector developments and company hires

Dignity Finance restructuring mooted

UK funeral provider Dignity has launched a consent solicitation with noteholders of its whole business securitisation, Dignity Finance, in relation to a deleveraging proposal. Following the award of a temporary covenant waiver by the class A noteholders, the company has continued to work on a long-term solution to improve the group's capital structure.

As part of implementing this strategy, Dignity is contemplating a potential transaction involving the realisation of value from selected crematoria assets, with the proceeds to be applied in a partial redemption of the class A notes. The firm is also seeking a series of amendments to provisions within the financing documents, in order to provide operational flexibilities and to bring the Dignity financing structure more in line with recent securitisation structures.

As a condition to this consent proposal, it will be required to inject a minimum of £70m into the securitisation group companies to partially repay some of the class A notes outstanding - including the payment of a redemption premium - in consideration for assets leaving the securitisation group, if a potential transaction in relation to the crematoria assets becomes unconditional within 12 months of noteholder approval. This will result in a deleveraging of the group and a positive impact on the underlying financial ratios.

The assets subject to the proposals are seven crematoria where the freehold and leasehold properties are owned by companies outside of the securitisation group and leased to Dignity Funerals. The portfolio is expected to generate a total of £6.7m EBITDA for the group. As part of any potential transaction involving these crematoria assets, Dignity may enter into an agreement to continue operating these assets.

In other news…

EMEA

Bryan Cave Leighton Paisner continues the expansion of its global real estate practice with the hire of Will Trotman as real estate structured debt partner. Trotman joins the team in London from Linklaters where he had served as counsel since 2017, and brings extensive experience across RMBS, CMBS, warehouse facilities, trade receivables, and supply chain finance working for arrangers, managers, lenders, investors, guarantors, and originators. Trotman’s appointment marks a major development in the firm’s position, establishing itself as an integrated one-stop solutions firm for clients both originating real estate finance deals and structuring off balance sheet outcomes from those loans.

Hudson, Lone Star charged over tax liability

The US SEC has charged Hudson Advisors and Lone Star Global Acquisitions for including Hudson’s owner’s anticipated income tax liability as a component of certain fees charged to 14 private equity funds they managed. Hudson and Lone Star Global have agreed to pay US$11.2m in civil penalties and have reimbursed the affected funds US$68.5m, which includes interest on the undisclosed tax liability charges.

According to the SEC’s order, between at least 2005 and 2017, Hudson included US$54.6m of its owner’s anticipated US tax liability in fees charged to the funds. By law, these tax liabilities were payable by the owner rather than by Hudson.

The SEC’s order finds that Hudson and Lone Star Global never disclosed the inclusion of these tax liabilities to their clients. The order also finds that Hudson and Lone Star Global were not authorised to charge this fee component without full and fair disclosure to the funds. Finally, the order finds that Hudson and Lone Star Global failed to implement appropriate policies and procedures in connection with conflicts of interest and disclosure of fees charged to advisory clients.

Without admitting or denying the SEC’s findings, Hudson and Lone Star Global agreed to a cease-and-desist order finding that they violated Sections 206(2) and 206(4) of the Investment Advisers Act of 1940 and Rules 204(6)-7 and 206(4)-8 thereunder.

North America

Post Advisory Group has hired new portfolio manager, Kevin Farley, as it works to build out its CLO and structured credit business. Farley joins the firm’s CLO and structured credit platform with more than 25 years of experience across financial markets, most recently operating as a CLO trader at Wells Fargo. Post Advisory hopes Farley’s addition to the team will assist its mission to provide clients with investment strategies that offer strong downside protection, low volatility, and low correlations to other asset classes.

Vista Equity Partners has appointed a securitisation veteran as md of capital & partner solutions as it works to expand its credit team. Michael Charlton will be responsible in his new role for leading investor relations efforts for Vista’s credit platform, Vista Credit Partners. Charlton will report to senior md and global head of capital & partner solutions, Greg Myers. He joins the firm with more than 30 years of experience across the industry from Anchorage Capital Group where he most recently operated as md and global head of business development and investor relations.