News Analysis
ABS
Preventative intervention
UTP management gaining traction
The Italian non-performing loan ABS market remains subdued, with publicly-placed issuance drying up after the expiration of the GACS scheme in June 2022 and performance so far this year generally below expectations. While securitisation has played a central role in de-risking Italian banks’ exposure to NPLs, they now appear to be refocusing on avoiding the classification of borrowers as non-performing through preventive intervention with respect to those defined as unlikely-to-pay (UTP).
“Although the Italian UTP market cannot be considered as developed as the NPL market, Italian banks will be facing a new challenge in the coming years: the development of clear and efficient procedures for managing their UTP stocks. Considering the regulatory constraints, in our view, securitisation and AIF structures could play an important role and therefore banks could continue developing specialised platforms with such purpose. Furthermore, proactive management of UTP stocks could lead to a decrease in Italian banks' NPL ratios, since a preventive intervention could result in the preservation of a borrower's economic conditions and the avoidance of default,” says Lorenzo Simonte, avp of European NPLs at DBRS Morningstar.
As of December 2022, the cumulative gross book value of NPLs on Italian banks’ balance sheets stood at €24bn versus €154bn in December 2017, according to DBRS Morningstar. Meanwhile, exposures classified as UTPs in the Italian banking system amounted to €38bn in 4Q22.
UTP exposures arise from agreements that are still valid and binding between the parties and sometimes also provide for further disbursements from the bank, together with any other undertakings usually provided by a loan agreement. DBRS Morningstar notes that this results in the need for more developed management skills on the servicer side, as well as restructuring a position that could not occur without the transfer of the underlying agreement in favour of a bank or financial intermediaries. These rearrangements could also require the disbursement of further loans to facilitate reclassification of the relevant debtors, which could be financed by an SPV through collections, external financing or the issuance of super senior notes.
One notable example of an Italian bank focusing on preventative intervention is BPER Banca, which – together with its subsidiary Banco di Sardegna - closed a €470m UTP securitisation at the end of April, further to a joint venture entered into with the Gardant Group in November 2022. The transaction involved the disposal of the portfolio via the Loira SPV, whereby BPER subscribed to the senior notes and 5% of the mezzanine and junior notes, while the remainder of the junior and mezz notes were subscribed to by companies controlled by Elliott.
The JV will focus on the management and recovery of UTP and NPL assets owned by BPER, as well as 90% of future NPL flows and 50% of future UTP flows of the BPER Banca Group, under a 10-year master servicing agreement. As part of the agreement, the sale to state-owned debt purchaser Asset Management Company (AMCO) of a €430m UTP portfolio was also finalised last month.
Securitisation is not the only instrument that market participants are using to proactively manage UTP exposures, however. UTP portfolios can be transferred without recourse to certain alternative investment funds (AIFs), which - as consideration for the relevant portfolios - issue units that are then subscribed to by the originators.
Such structures also allow for the possibility of disbursing additional loans to borrowers to facilitate their reclassification as ‘in bonis’, which can be financed through the issuance of special categories of units or the recognition of a debt in favour of external lenders. AIFs with this purpose include: Back2bonis, managed by Prelios, with AMCO as master servicer; UTP Italia Fund, managed by Sagitta, with Zenith Service as master servicer and Intrum Italy as special servicer; Efesto, managed by Finint, with Italfondiario as master servicer; Responsible & Sustainable Corporate Turnaround Fund; and Credit & Corporate Turnaround Fund, managed by illimity.
Meanwhile, recent Scope Ratings research shows that the performance of Italian NPL portfolios has been mixed. In terms of timing of collections (net of expenses), almost 22 out of 451 transactions have exceeded servicers' projections by an average of 109%, while 23 fell short of business plan expectations by a significantly lower delta (25%). When considering profitability, 39 out of 45 transactions exceeded business plan expectations in terms of specific net present value profitability ratios (NPVPRs).
The agency anticipates the pace of collections in 2023 to be similar to last year’s, with about half of the transactions lagging servicers’ projections by roughly 30% and the remainder outperforming by an average of 70%. Profitability-wise, servicers are expected to close positions above their business plan targets for about 80%-90% of transactions.
However, performance metrics relating to business plan projections have certain limitations and are not directly comparable across transactions. Rossella Ghidoni, analyst at Scope, notes that the agency considers two factors when analysing performance versus business plan expectations.
The first is that most recent deals have business plans that were crafted post-pandemic; therefore, they have more conservative assumptions in terms of timings and recovery values. “Consequently, it’s easier for more recent deals to overperform, as performance is linked to the nature of the business plan and the prevailing macroeconomic scenario,” Ghidoni observes.
The second factor is related to the natural evolution of performance. For example, there is a high likelihood of good performance on the first payment date, due to collections of cash-in-court proceeds versus servicer expectations.
NPL underperformance has largely been driven by the backlog of judicial proceedings, which built up amid the Covid crisis. Extra-judicial agreements and note sales have helped collection inflows, but this has come at the expense of high discounts – hence why overall performance relative to Scope’s initial expectations has been net negative.
The main servicer strategy for Italian NPLs continues to be the judicial route, which accounts for around 60% of total collections. Scope analyst Paula Lichtensztein notes that while discounted payoffs aren’t generally included in business plans, in practice servicers do undertake them.
“Given the continued disruption to courts and Covid-related judicial backlogs, servicers have increased their reliance on DPOs and note sales. However, recently we observed a sharp decrease in note sales activity, possibly because higher interest rates are causing the bid/ask gap to widen,” she suggests.
The backlog in judicial proceedings will likely be resolved gradually, but macroeconomic and geopolitical risks remain high in Italy and Scope expects financial conditions to continue tightening. As a result, the agency’s base case is that primary issuance and performance of NPL securitisations will remain subdued for the foreseeable future.
Although Lichtensztein doesn’t rule out the possibility of seeing some deals launch, she anticipates that volumes will be similar to those seen in Spain and Portugal. “The Italian NPL ABS market is more mature than those jurisdictions, but issuance is likely to be limited in the absence of a clear incentive from GACS.”
Whether the GACS programme will be renewed under the new Italian government and what the new terms will be for its reintroduction remain to be seen. But the development of the Guaranteed Loan Active Management (GLAM) platform for post-Covid-19 loans, operated by AMCO, could also spur issuance activity.
In addition to expanding its existing franchises in non-performing exposures (NPEs) and UTP loan management, AMCO plans to add around €11bn of assets under management via the GLAM platform by end-2025. These loans will be guaranteed by the Italian Central Guarantee Scheme (Fondo Centrale di Garanzia), with €2.9bn set to be managed by AMCO in-house and €8.2bn by third-party special servicers.
As well as managing expected NPE flows, GLAM will limit the risk of state guarantees being called upon while attempting to preserve the viability of borrowers, according to Fitch. This is in line with AMCO’s publicly-stated "patient approach" that supports borrowers' long-term business continuity by settling accommodative terms to debt repayment.
Corinne Smith
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Hedging risk
A further risk for Italian NPL securitisations is looming on the horizon - the combination of rising interest rates and slower-than-expected collections. When a transaction amortises slower than anticipated, interest rate risk caps - the notional of which are established based on servicers' collections expectations - could become insufficient to cover the increased expenses stemming from rising rates and notes' higher-than-anticipated outstanding balances.
Moody’s notes that of the 28 GACS transactions it currently rates for which the original senior note is outstanding, seven will be under-hedged by their next interest payment date, with interest rate cap notional amounts on average accounting for just 73% of senior notes' outstanding principal. “By the time senior notes become under-hedged, junior notes would be completely unhedged to the extent that they were even covered by the same interest rate caps. Many of GACS transactions' mezzanine tranches are already deferring interest payments because of transactions' weak performance,” the agency observes. |
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News
Structured Finance
SCI Start the Week - 12 June
A review of SCI's latest content
Last week's news and analysis
Capital panic
Use of SRT by US banks more pertinent as reg cap rises
CRAFT priced
Deutsche Bank executes new synthetic ABS
Entrepreneurial spirit
Howden CAP answers SCI's questions
Manager tiering
Japanese demand driving dispersion?
Santander selling
Spanish bank in US market with new auto loan CLN – price indications
Unfunded shift
Montepio launches synthetic RMBS
For all of last week’s stories including ‘Market moves’ and ‘Risk transfer round-up’ click here.
Recent premium research to download
CRT counterparty risk – May 2023
Recent banking instability is unlikely to result in contractual changes in synthetic securitisations, but structural divergences are emerging. This Premium Content article investigates further.
‘Socialwashing’ concerns – May 2023
Concerns around ‘socialwashing’ remain, despite recent advances in defining social securitisations. This Premium Content article investigates why the ‘social’ side of ESG securitisation is more complex than its ‘green’ cousin.
European solar ABS – May 2023
Continental solar ABS is primed for growth as governments and consumers seek energy independence. This Premium Content article investigates.
US CRT thaw – April 2023
The recent Merchants Bank of Indiana deal could herald a thaw in the US capital relief trades market, as this Premium Content article outlines.
All of SCI’s premium content articles can be found here.
Call for submissions: SCI CRT Awards 2023
The submissions period is now open for the 2023 SCI CRT Awards, covering the global capital relief trades market and the US credit risk transfer market. Nominations should be received by 5 July and the winners will be announced at the London SCI Capital Relief Trades Seminar on 19 October. Pitches are invited for deals issued during the period 1 October 2022 to 30 June 2023.
For more information on the awards categories and submissions process, click here.
SCI In Conversation podcast
In the latest episode, Vesttoo co-founder and chief financial engineer Alon Lifshitz outlines how the insurance-linked securities landscape is evolving from catastrophe bonds to a wider range of structures, bringing insurance risk directly to the capital markets. He also discusses ILS modelling approaches, the involvement of rating agencies in the insurance risk transfer space and a new index project that is underway.The podcast can be accessed wherever you usually get your podcasts, including Apple Podcasts and Spotify (just search for ‘SCI In Conversation’), or by clicking here.
SCI Markets
SCI Markets provides deal-focused information on the global CLO and Australian/European/UK ABS/MBS primary and secondary markets. It offers intra-day updates and searchable deal databases alongside CLO BWIC pricing and commentary. Please email Ronald Adjekwei at SCI for more information or to set up a free trial here.
SRTx benchmark
SCI has launched SRTx (Significant Risk Transfer Index), a new benchmark that measures the estimated prevailing new-issue price spread for generic private market risk transfer transactions. Calculated and rebalanced on a monthly basis by Mark Fontanilla & Co, the index provides market participants with a benchmark reference point for pricing in the private risk transfer market by aggregating issuer and investor views on pricing. For more information on SRTx or to register your interest as a contributor, click here.
Upcoming SCI events
Women In Risk Sharing
18 October 2023
SCI's 9th Annual Capital Relief Trades Seminar
19 October 2023, London
News
Structured Finance
Compliance issues
'Compelling case' for reform of Article 5
A new AFME report finds that investors are likely to interpret ambiguous provisions under Article 5 of the Securitisation Regulation in the EU and UK conservatively - and, in doing so, will assume disproportionately high costs to the business. The report identifies key challenges relating to compliance with investor due-diligence requirements and suggests potential strategies to overcome them.
“Revival of the securitisation markets relies upon targeted changes to various elements of the Securitisation Regulation and corresponding prudential frameworks. One crucial element with potentially material impact relates to regulatory obligations imposed on investors relating to due diligence,” explains Shaun Baddeley, md of securitisation at AFME.
He continues: “AFME has frequently referred to the lack of risk sensitivity embedded within specific areas of legislation. Article 5 that covers investor due diligence is a good example of this.”
In particular, the AFME report suggests that the regulation “substantially reduces agility and flexibility” in the investment process, thereby materially reducing investment opportunities for new investors - regardless of the credit risk – which, in turn, impacts liquidity in the secondary markets and results in a less efficient market for all. These factors have the unintended effect of creating such high barriers to entry, even for seasoned credit investors, that it becomes challenging to build a business case to participate in the European ABS market.
The burden of compliance appears to be an overarching topic for many market participants: no other financial product in the EU or the UK is subject to a comparable administrative burden for investors, making securitisation a particularly onerous product for investors. Other issues highlighted by the report include: the unattractiveness of securitisation for investors targeting positions below a certain size; securitised products being held under management by an increasingly small and concentrated population of European asset managers; the development of alternative unregulated products outside the scope of the EU/UK Securitisation Regulations; an underdeveloped market for securitised products, resulting in an overreliance on other forms of finance; and reduced liquidity of securitised products, compared to other markets where more investors are able to participate.
To produce the report, AFME convened a working group composed of several non-bank investors covering different sectors of the market. The association believes that the feedback gathered from the working group strongly suggests that there is a compelling case for reform in the interpretation of Article 5 of the Securitisation Regulation.
This is also in line with industry feedback to the European Commission in September 2021, in response to the Commission’s targeted consultation on the functioning of the securitisation framework - which confirmed that the Securitisation Regulation did not result in a widening of the investor base, given the significant barriers to entry. Consequently, reform will be key to unlocking the benefits of investor due-diligence and presents a renewed opportunity to attract investors back to securitisation and promote the growth of the sector, according to AFME.
The findings of this report precede a second report that will follow later this summer, proposing some guidance and clarifications in the form of Q&As. AFME believes this could be used as a starting point by competent authorities to provide clarity to market participants regarding the interpretation of such requirements.
“The ABS market has made a huge effort to adopt the requirements of the securitisation regulations over the past few years,” concludes Janet Oram, head of ABS at USS IM. “However, during this time it has become apparent that implementation has not been consistent between institutions, due to differing interpretations of rules, which is detrimental to the aim of a well-functioning market. Volumes have largely stagnated - despite this being an important source of funding for the real economy and, as the world moves toward net zero, a perfect mechanism to finance some of that transition.”
Corinne Smith
News
Capital Relief Trades
Full stack comeback
BBVA finalizes full stack SRT
BBVA has finalized a full stack capital relief trade that references a static €804m portfolio of Spanish auto loans. Dubbed BBVA Consumer Auto 2023-1, the transaction is virtually identical to last year’s trade (see SCI’s capital relief trades database), although this year BBVA removed class F and merged it into class E. More saliently, the securitisation sets itself apart from other Iberian auto securitisations given its static nature and the high share of used cars.
Cristina Pagani, Director, RMBS at Fitch Ratings notes: “The 2023 transaction is not substantially different to its predecessor, BBVA Consumer Auto 2022. On the asset side, the pool composition is very similar and there have been only small changes in asset assumptions, namely a small reduction in base case defaults and recoveries. The changes reflect updated information received from BBVA on both performance data at book level and data related to outstanding ABS transaction of the same originator. We have also considered sector outlook expectations. The only difference to last year’s trade is the removal of Class F, which has been merged into Class E. Fitch currently rates classes A - D for BBVA 2023 and classes A - E for the 2022 transaction.”
Rated by Fitch and Moody’s, the transaction features €688m class A notes, (priced at three-month Euribor plus 0.65%), €30m class B notes (1.5%), €30m class C notes (2.3%), €20m class D notes (5.5%), €32m class E notes (11%), €4m class Z notes (12%). The tranches amortize on a pro-rata basis with triggers to sequential amortization. Key performance triggers are cumulative defaults on the portfolio exceeding a certain dynamic threshold or a principal deficiency greater than zero on two consecutive payment dates.
Around 76% of the portfolio balance benefits from credit protection insurance covering up to 18 monthly instalments on loans in case of unemployment, and the remaining balance in case of disability or the deaths of the borrowers. The pool comprises fully amortising loans that have been originated by BBVA to individuals resident in Spain in the course of its normal business. More than 95% of the portfolio balance was originated in 2021 and 2022.
Stelios Papadopoulos
News
Capital Relief Trades
Risk transfer round up-14 June
CRT sector developments and deal news
Societe Generale is believed to be readying a synthetic securitisation of leasing assets called Colisee two that is expected to close at the end of this month. The transaction would be a follow up of the first Colisee trade that was executed in 2020 (SCI 18 October 2021). Societe Generale declined to comment. This follows rumours of another leasing deal from Bank Millenium (SCI 28 March).
Stelios Papadopoulos
News
RMBS
Rental retreat
Rising BTL remortgaging risks eyed
Challenges lie ahead for the UK’s BTL RMBS market as buy-to-let lending continues to decline and remortgage risks climb. Lower LTVs can be a key mitigating factor, although it is likely that many BTL landlords will opt to exit the market entirely.
BTL lending reached a peak at £37.4bn in 2015, but now only accounts for an average of 12.6% of yearly residential lending over the last five years. The changing financing and tax environment may even see some BTL landlords exit the market altogether, as they face reductions to profit with the impending Renters’ Reform Bill and additional tax implications set for 2023-2024.
On top of this, minimum energy efficiency standard regulations introduced for rented properties in 2021 continue to ramp up pressures on landlords to retrofit their properties - which will incur “substantial costs” for properties with EPC ratings of D or lower, according to KBRA.
A new report from the rating agency assessing the impact of the declining BTL sector on UK RMBS considers remortgage risk to be higher for loans nearing the end of their fixed rate period, as delinquencies may rise for this group of borrowers. BTL portfolios with fixed rate mortgage loans ending in 2023-2025 account for 41.8% of the dataset used by KBRA.
Of the BTL loans included in KBRA’s dataset nearing the end of their fixed period, 20.3% were considered to hold greater remortgaging risks as a result of high LTVs (greater than 75% - including a 5% haircut) or relatively low DSCRs (less than 1.25x the assumed remortgage rate).
For loans ending their fixed periods in Q3 of this year, a positive remortgage is likely for the majority, as KBRA understands 53.8% to be above the threshold for remortgage risk. However, with 39.6% of the loans with a DSCR less than 1.25x and a 6.7% haircut indexed LTV above 75%, 46.2% of loans are considered to have greater remortgage risk exposure.
In total, KBRA understands 48.6% of loans with their remortgage period ending in 2023-2025 to have high remortgage risk exposure. Loans with their fixed rate period ending in 1Q24 are expected to face the greatest remortgage risk, with an estimated 59.3% of loans challenged.
Regionally, London is set to face the most remortgage risk due to the high concentration of BTL properties, as well as having higher property prices and lower yields than any other area. 64.5% of BTL loans in London face a higher remortgage risk - which compares to the second largest region’s estimate, the South East, of 46.9%.
Delinquency risks may well rise with the remortgage risks, with 19.5% of all loans assessed by KBRA at an increased risk of delinquency because of tight DSCRs.
The delinquency risk is therefore also greatest in London, accounting for 12% of the 20,000 BTL loans assessed, followed once again by the South East with an estimated 2.9%.
As well, apartments account for a sizable chunk of BTL mortgages and due to the greater price declines seen for the property type, remortgage risk may be higher for apartments – and could force borrowers to inject more equity to support remortgaging.
Claudia Lewis
Market Moves
Structured Finance
Walker steps up to global credit head
Sector developments and company hires
Walker steps up to global credit head
Aon has established a new global credit team structure within its Reinsurance Solutions unit, appointing Ben Walker as head of global credit. The global credit team now combines Reinsurance Solutions’ existing mortgage, trade credit, structured credit and political risk and surety businesses to form one global function.
The aim is to facilitate access to a broader group of collaborative Aon experts across all credit reinsurance classes to help clients build resilience and reduce volatility across their businesses. Aon’s Reinsurance Solutions unit has more than 50 credit, mortgage and surety specialists globally, who transact approximately US$3bn of reinsurance premium annually.
Other leaders of the firm’s global credit reinsurance team include: Nick Ayres, who becomes chairman of global credit, while continuing as chairman of credit and financial risks UK; Doug Espenson, who becomes head of US mortgage; Rupert Evans, who becomes head of trade credit, structured credit and political risk, and international surety, and continues as head of credit and financial risks UK; and Andreas Koutris, who becomes head of international mortgage.
In other news…
Deposit account options offered
Computershare Corporate Trust has introduced a suite of deposit account options that it hopes will redefine the traditional, single depository institution model. The business drew upon its parent company Computershare’s global network of highly-rated financial institutions to develop deposit account options that meet the credit rating and liquidity conditions of governing agreement requirements, including those of trusts.
Many products in the suite offer interest-bearing deposit account options, with different return rates for structured finance and conventional debt, as well as trust and agency clients. The range offers customisable investment models, each of which have been designed to provide market-based flexibility. A traditional single bank depository product is also available.
The company partners with investment-grade financial institutions that are highly rated by Fitch, Moody’s or S&P to administer the deposits and investment activities of trust and agency clients.
EMEA
Alantra has established new investment banking headquarters, with the opening of an office in London, where the firm will bring together an important part of its international businesses with its UK team. The office will accommodate more than 180 professionals, of which 150 are investment bankers covering M&A, debt, credit portfolio advisory, structured finance and ABS. Miguel Hernández, ceo of investment banking, and Andy Currie, co-chairman of investment banking, will both be based in the new London premises, as well as the co-ceos of FIG advisory, Andrew Jenke and Nick Colman.
Guy Carpenter has strengthened its cyber team with a series of appointments and promotions. Among the new hires is Zain Awan, who has been named international cyber ILS lead, with responsibility for further strengthening the firm’s analytical and transactional capabilities to support the growth of the sector. He will also partner with GC Securities to structure and deliver cyber insurance-linked securities transactions. He was most recently svp, reinsurance broker & actuary, in Guy Carpenter’s London cyber team.
Morgan Stanley welcomes former head of EMEA credit financing solutions and CLOs at Credit Suisse to its structured finance practice in London. Arun Cronin joins the firm after 13 years at Credit Suisse to serve as head of EMEA corporate asset finance - bringing almost 20 years of expertise to the role across fund finance, CLOs, private lending and credit structuring to the role.
Jonathan McCormick is set to join Scotiabank (Ireland) later this month as director, securitised product sales, based in Dublin. He was formerly an md and structured finance coverage specialist at Deutsche Bank, which he joined in September 2003.
Market Moves
Structured Finance
FCA urged to address 'regulatory redundancies'
Sector developments and company hires
FCA urged to address ‘regulatory redundancies’
The Managed Funds Association (MFA) has submitted a letter to the UK FCA, proposing improvements to the country’s regulatory framework for securitisations that would expand capital investment in the UK and optimise risk management on behalf of UK investors. The letter encourages the FCA to “address regulatory redundancies” and enhance compatibility with the rules governing other jurisdictions with thriving securitisation markets, such as the US.
The move is in anticipation of the repeal of the UK Securitisation Regulation in 3Q23 and subsequent consultation on the next iteration of the Sec Reg (SCI 12 December 2022). In its letter, the MFA encourages the FCA to set the scope of the consultation as widely as possible to maximise the ability to create a more agile regulatory framework.
Notably, the letter emphasises that the general due diligence requirements under the Sec Reg are redundant and ultimately inhibit alternative investment fund managers’ (AIFMs) global investment strategies (SCI 14 June). MFA calls on the FCA to remove AIFMs from the scope of due diligence requirements altogether, as they are already subject to robust requirements under the Alternative Investment Fund Managers Directive (AIFMD).
The letter also notes how the current risk retention due diligence requirement prevents AIFMs from investing in many US securitisations, even though the US regulations have similar risk retention rules.
In other news…
TwentyFour founders to take advisory roles
TwentyFour Asset Management has announced that Rob Ford and Gary Kirk will be retiring from the partnership in September and transitioning to advisory roles at the firm. Having helped co-found the business in 2008, they have been in discussion with the other partners for some time about stepping back from their day-to-day roles.
During his time at the firm, Ford has co-managed a number of TwentyFour's ABS product lines - most recently, UK Mortgages Ltd, which was launched in 2016 and subsequently merged into TwentyFour Income Fund last year. The fund is now managed by the wider 10-person ABS team led by Doug Charleston and Aza Teeuwen.
Kirk has been co-managing the Multi Sector Bond investment team since it was launched in 2009, which has subsequently grown to five partners and 10 further investment professionals, adding Danny Zaid in 2021 and both Lee Crooks and Adel Ahmed in 2022.
Ford and Kirk will step down from TwentyFour's investment committee, which sets the top-down macro risk appetite for the firm, but the remaining 10 members have an average industry experience of 20 years and tenure at the firm of 12 years.
Market Moves
Structured Finance
UBP launches new fixed income fund
Sector developments and company hires
Union Bancaire Privée (UBP), the Geneva-headquartered private bank, has launched a new fixed-income strategy spanning high-yield bonds, subordinated debt and securitised credit. The fund, named UBAM Strategic Income, will seek a double-B rating risk profile and target an average return of 7% per annum across its lifespan.
UBAM Strategic Income, which will invest in CLOs in addition to other forms of structured credit, will be led by Philippe Gräub, head of UBP’s global and absolute return fixed income team. He will be supported by portfolio managers Thibault Colle and Bernard McGrath.
The firm says it will perform relative-value analysis on an ongoing basis to determine the weighting of each asset class. The fund is currently available to investors across 14 western and northern European jurisdictions, as well as Singapore.
“This new strategy represents another valuable building block to complement UBP’s global and absolute return fixed income range,” says Nicolas Faller, co-ceo of asset management at UBP. “Supported by the current macroeconomic backdrop, it intends to seize the opportunities recently created across the asset class while meeting our clients’ growing demand for innovative high-income solutions.”
UBP currently has CHF140.4bn (US$156.3bn) in assets under management, US$13bn of which is accounted for by the global and absolute return fixed income team.
Market Moves
Structured Finance
BNY turns to AccessFintech for digital innovation
Market updates and sector developments
BNY turns to AccessFintech for digital innovation
BNY Mellon has become the first trustee to join the data management platform, AccessFintech, as it continues in its commitments to improving loan data management, operations, and digitisation across the financial universe.
The collaboration intends to significantly improve BNY Mellon’s loan data management capabilities by addressing historical issues, and ultimately enhancing assistance to clients in navigating the complexities of loan data.
AccessFintech’s digitisation of the loan life cycle strives to improve operations, regulatory compliance, decision making, and risk reduction by automating current manual processes.
In adopting AccessFintech’s technology with its own comprehensive services and expertise, BNY Mellon hopes the pair’s collaboration will open the door to new opportunities, and encourage further digital innovation across the market.
In other news…
FCA geen-lights Creditreform Rating
German credit rating agency Creditreform Rating has received certification from the Financial Conduct Authority, enabling it to offer its services to institutional investors in the UK. The development comes three months after the Neuss-headquartered business was included in the deposit guarantee scheme of German banks’ (EdB) portfolio of recognised rating agencies.
Creditreform is looking to establish itself as a European alternative for rating services in the international capital markets. It is currently managing 500 rating projects spanning 5,500 bonds and is seeking accreditation for ECAF, the ECB framework for limiting financial financial risks in monetary policy operations.
Market Moves
Structured Finance
Job swaps weekly: Triumph for VPC
People moves and key promotions in securitisation
Job swaps weekly: Triumph for VPC
This week’s securitisation job swaps have seen two senior directors at Santander US subsidiary Amherst Pierpont Securities leave the firm to take up leadership roles at a newly launched structured finance firm. Elsewhere, Carlyle has named a successor to outgoing cfo Curt Buser, while Sumitomo Mitsui Banking Corporation (SMBC), Challenger Investment Management, and BMS Re have all made appointments.
Private credit firm Victory Park Capital (VPC) has hired two senior directors from Amherst Pierpont to head up its newly launched structured finance and capital markets subsidiary Triumph Capital Markets. The new firm has appointed Kevin Gibbons and Jim Dowd, both of whom will serve as mds working out of Chicago.
Triumph will provide advisory and capital raising products to non-bank financial institutions, with a focus on privately placed ABS, structured credit, specialty finance and real estate deals. VPC ceo Richard Levy says the launch of the new business forms part of the group’s strategy to diversify into new asset classes in order to capitalise on “varying market conditions”.
Gibbons leaves his role as managing director and head of ABS banking at Amherst Pierpont after four years with the firm, having previously spent 10 years at Capital One. Dowd joins Triumph after 12 years at Amherst Pierpont, where he was most recently a director focused on origination and structuring across ABS, MBS and CMBS.
Meanwhile, Carlyle has named New York-based John Redett as cfo and head of corporate strategy, effective 1 October 2023. He succeeds Curt Buser, cfo at Carlyle since 2014, who has decided to retire from the firm effective at the end of the year. Buser will become a senior advisor at the end of September, when he will work to ensure a smooth and successful transition until his retirement.
Redett has 25 years of experience in financial services, the past 16 of which have been at Carlyle, including serving as co-head of global financial services since 2016 and sole head of global financial services since 2020. In his new role, he will work with Carlyle’s ceo, Harvey Schwartz, and the leadership team to implement the firm’s strategy for driving long-term growth and position it for the future.
In addition, Jim Burr will become head of global financial services, effective 1 October 2023. He is a 27-year veteran of the financial services industry and has been an md on the global financial services team since joining Carlyle in 2008.
SMBC has promoted Anuj Banga to executive director within its structured finance practice in Mumbai. Banga takes on the new role having served as first vp at SMBC since 2021, where he joined after spending a decade at Standard Chartered. Banga holds special interest and expertise in power, infrastructure and new energies, which he will continue to work on at SMBC.
Challenger Investment Management has added a new portfolio manager to its European and US ABS team. Maddi Rowlatt joins Challenger in their London office from Allspring Global Investments, where she most recently operated as portfolio manager and senior research analyst.
National Bank of Kuwait has added to its real estate structured finance practice in France with the hire of seasoned structured finance professional, Bénédicte Dumant. The new recruit will work on the originations team and will be based in Paris. Dumant joins from Sienna Private Credit, where she operated as a portfolio manager for its real estate debt funds business. She previously served as a risk manager on the structured finance team at Societé Generale.
BMS Re has appointed Brendan O’Brien as vp, based in Bermuda. Reporting to Chris McDowell, ceo of BMS Re Bermuda, O’Brien will support BMS Re’s alternative risk transfer initiatives and contribute to its traditional reinsurance and retro activities. His role will encompass both property catastrophe and non-catastrophe lines, including credit reinsurance, bolstering BMS Re’s existing offering in the market.
O’Brien joins BMS Re from his latest position as an underwriter in Assured Guaranty Re’s structured finance division. Prior to this, he spent six years at Nephila Capital on the catastrophe bond desk.
Belén Alonso Robles is set to start a new role as vp at Santander US as a part of its structured finance team. Based in New York, Robles will serve as vp for underwriting and portfolio management, having previously operated as vp of portfolio management and oversight on the credit risk portfolio management team. Robles has been with Santander US since 2016.
RWE Clean Energy has recruited former investment banking associate, Sonya Dekhtyar, to support its structured finance practice. Dekhtyar joins the RWE team in Chicago from William Blair, where she had been an associate since 2020. She will join RWE’s growing structured finance team, led by vp Hashim Rizvi, and support its mission to raise external project financing for utility-scale renewable energy projects.
Northmarq welcomes new senior associate for debt and equity placement, Chandler Kaye, to its office in West Palm Beach, Florida. Kaye comes to the debt, equity, and loan servicing firm with expertise in commercial real estate, real estate development, capital markets, and multi-family properties. Prior to this, Kaye has held positions at Walker & Dunlop, and most recently at CBRE, where he operated as senior debt and structured finance analyst.
Finally, financial advisory group Kroll has hired JLL’s Mike Bammel as a Los Angeles-based md in its valuation advisory services practice. Bammel has a background in fossil, nuclear and renewable energy power projects and leaves his role as md at JLL after two and a half years with the firm. In his new role, he will provide appraisals and cost segregations for structured finance transactions.
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