Contents

Structured Finance

Develop, advance and retain

IWD 2024: Inclusion in structured finance

Diversity is a cornerstone of the practice of securitisation, but the same cannot be said for the make-up of securitisation practices worldwide. To mark 2024’s International Women’s Day, Claudia Lewis highlights the need to acknowledge the often-overlooked intersectional challenges many women face on top of those of gender.

The theme of this year’s International Women’s Day celebration, ‘Inspiring Inclusion’, highlights the need for greater consideration for the intersectional issues affecting women and further increasing the barriers to enter, to stay and to rise within the structured finance industry. Without addressing other struggles and discrimination based on race, disability, LGBTQ+ identities and neurodiversity, then not all women are included. Although diversity is a cornerstone of the practice of securitisation, the same cannot be said for the make-up of securitisation practices worldwide. 

“In securitisation, the most important thing is diversification – not just in your portfolio. But having diversification among your colleagues too can only be a positive thing for business,” states Naomi Prasad, director at Pemberton Capital Advisors.

The job of diversifying the workplace for now relies heavily on the proactive efforts of women within the industry in supporting and advocating for women. Often this lies on the shoulders of the most senior professionals, whose rank has historically not always borne the most inclusivity-minded female bosses.

Women within structured finance have long been advocating for the inclusion of women within the industry. This advocacy includes participation through formally organised groups such as the 1999-founded Women in Structured Finance, the 30% Club set up in 2010 to improve the representation of women on boards across different industries, and the SFA’s Women in Securitisation group which began in 2014 and focuses on development, advancement and retention.

While progress has been made through formal policies for inclusion, such as mentorship programmes and hiring quotas, informal allyship and advocacy remain a crucial component in improving inclusion and helping women to succeed and climb the securitisation ladder.

Progress: where are the women?
Despite accounting for a 51% majority of the world’s population, women continue to represent an overall minority of the structured finance workforce. Tamara Box, partner at Reed Smith and founding member of Women in Structured Finance and the 30% Club, highlights the ongoing disparity: “The playing fields are being levelled – but they’re not level yet.”

In 2010, when the 30% Club was founded, only 9% of the FTSE board members were women. Now, women account for 43%.

While more women hold senior positions than ever before, women remain minority-holders of senior leadership positions globally – including in structured finance. “It’s really hard to tell how much improvement there has actually been,” says Juan Grana, md and senior portfolio manager at Chorus Capital. “Sometimes it feels like there has been progress - and while there is, of course, more effort to show the successes and give visibility to women who have climbed the ranks, the data is not conclusive.”

Indeed, assessing just how far the structured finance industry has come in terms of gender diversity is challenging, as there remains little data and visibility into the progress across different market segments and roles. “One thing you should think about when you’re looking at statistics is: are you seeing women doing well in the most sought-after roles, which have historically been in male-dominated areas?” asks Grana.

The increasing presence of women across the industry as a whole is not a sufficient measure of progress. At Chorus Capital, women make up 33% of the company overall, including 30% of the investment team – which is a noteworthy achievement versus industry standards, especially for a boutique asset management firm. Pushing for gender diversity required challenging gender norms – not only seeing more women in traditionally male professions, but also seeing more men in roles traditionally dominated by women, such as HR or sales.

“On the buy-side, when you look at investment firms, it’s about women in senior investment jobs. I think that’s how you can really tell which firms are doing well,” states Grana. “That’s an important measure of progress and change.”

Given the influence of investors, keeping up to speed with diversity and ESG could be relatively easier for them than major banks and corporations relying on outdated, company-wide policies. However, no efforts to compile data have yet been made to prove these suspicions. 

Importance of women: relative value
Although statistical evidence may be lacking, it is hard to deny in the cold light of day the absence of women in the securitisation workplaces across the globe. Nevertheless, the issue of gender diversity is not just an issue for women within structured finance, but a fundamental concern for the success of businesses. 

Diversity has been proven to be a benefit to operating in this industry, as studies have found that without women, a given team or company is less successful. “We need the cognitive diversity,” argues Box.

Women bring invaluable perspectives to decision-making processes, particularly when it comes to assessing risk and ESG considerations. Studies have proven that firms led by women perform better and pose less of a credit risk – generating a lower probably of default. Women within structured finance have anecdotally acknowledged that women often have superior leadership styles to men: instead of taking autonomous approaches to traditional male leaders, women lead by example, they coach and they delegate.

This shouldn’t be surprising, given widely-held misconceptions of women’s capabilities. A prominent example being the universal belief that women are terrible drivers, yet the insurance premiums for women are significantly lower than those for men.

However, discussions around gender are becoming even more critical, as attitudes towards women’s rights are regressing with the rise of alt-right misogyny. According to one study from KCL and Ipsos, 53% of men believe gender diversity has progressed enough. Not only do a reported third of women agree, but 20% of Brits believe feminism has gone too far and now consider men to be discriminated against.

The World Economic Forum confirmed that advances in gender equality have significantly slowed, re-estimating that gender parity will not be reached for another 131 years, given current rates of progress. “It’s disheartening to look back on my 30 years of efforts towards gender balance and inclusion, only to see the pendulum swing back to the dark ages. This is no time for complacency,” warns Box. “Our industry needs the skills and insights that women bring to leadership roles, and it is the responsibility of each and every one of us to work harder to make that happen.”

The culture within structured finance has changed dramatically over the years. The financial services industry was notorious for harbouring sexism under the control of the ‘old boys club’, but Box founded Women in Structured Finance with the purpose of providing a network for women and to get them to realise they do not have to ingratiate themselves with the patriarchal, old boys network that dominated.

Nevertheless, improvements in attitudes towards gender diversity and inclusion are far from universal, and reportedly vary massively between structured finance workplaces worldwide. Many women in the sector note inclusion of women and minority groups to be far better in the US and Europe, and offices in the Asia Pacific region to be among the worst.

While everyday sexism prevails in most co-ed workplaces worldwide, defining and policing workplace cultures for misogyny remains difficult, making it challenging for young women to break in and foster workplace relationships from the offset. Making meaningful changes to toxic cultures within structured finance requires more women in leadership positions. Once-praised efforts to ensure one woman sat on a board is no longer enough: at least three women are needed on a board to see the full economic benefit of diversity.

“The challenge remains in the numbers,” argues Box. Although women have infiltrated every corner and field within structured finance – and risen to the top – the mission is now to support women in following in these footsteps.

“Part of the problem in getting women into senior roles is a self-perpetuating one: the fewer women we see in leadership, the less likely it is that women will get promoted to those senior positions. You cannot be what you cannot see,” says Box.  

She continues: “The answer, of course, is simple: if you want more women in leadership, you have to put more women in leadership. Seeking out and promoting high-potential, capable women will go a long way towards creating the all-important role models for junior associates. And don’t tell me you can’t find them; they’re all over your organisation and others. You have to look beyond the industry stereotypes if you want to see tomorrow’s leaders.” 

Retention: don’t ask, don’t tell
While there appears to be no issue in recruiting women into the industry, there continues to be a significant drop in numbers when it comes to both the retention and promotion of senior women within structured finance. Banks’ graduate programmes are reportedly routinely seeing women accounting for more than 50% of their intake.

Poor retention rates among more senior female professionals in highly competitive industries like structured finance is often mistakenly pinned on sexist misunderstanding instead of data-driven insights. “It’s not just about women wanting to start families,” explains Box. 

Departing high-pressure jobs for new careers is quite the common phenomenon - although societal expectations often confine men to high-flying careers, while women are allowed to be more multi-faceted. Not only do women continue to take on more unpaid labour within the workplace, but they shoulder the brunt of the caring responsibilities in their personal lives too.

Women in their 40s are disproportionately affected as they battle the care-gap – caring for young children, as well as elderly relatives. Not only is this all a recipe for burnout, but it also takes a significant toll on women’s career trajectories – as, for the so-called ‘sandwich generation’, caring responsibilities collide with key years for career progression within structured finance. The pandemic exacerbated this issue, as more women than men left the workplace – many of whom did so to tend to these caring responsibilities. 

Measures to improve the burden on working parents are often promoted as being female-forward, despite an equal need for childcare by both mothers and fathers. However, parental leave policies, flexible working agendas and in-house creches do in fact improve female staff retention.

On these policies, Grana states: “All you’re trying to achieve is to make up for how society is unfair on women – while it’s not the employer making the world unfair, employers need to reflect the world that we live in.”

Enforcing policies universally for both men and women could not only change attitudes, but is also essential for preventing discrimination against women using flexible working. Removing the ‘decision-making’ for a boss in allowing a working mother to work from home, for instance, means that when promotions come up, this isn’t viewed as a negative.

“Being able to take advantage of flexible working without having to give explanations is one example,” observes Grana. “This policy would have a disproportionate beneficial impact on women - by just removing the stigma of taking up flexible working.”

The same goes for policies supporting women with oftentimes debilitating reproductive health conditions, including PCOS and endometriosis – which are said to impact 10% of women during childbearing years. Although just a handful of major corporations have implemented menstrual leave policies worldwide so far, such policies strive to negate discrimination against women with gender-specific health conditions that impact their ability to work. 

Very little has shifted culturally in terms of the roles of men and women as carers, however, as the question of having a career or a family is one still only asked by women. Therefore, until true gender parity is reached, the question is less one asking if women can ‘have it all’ and instead a question of how workplaces can support women while they are expected to do it all.  

Hiring targets: the quota question
Quotas are often adopted as a formalised means of ensuring workplaces strive to build teams which are representative of the world around them. However, feelings remain mixed on both the effectiveness of diversity hiring targets and their effect on how women perceive their own worth in the workplace.

“I dislike quotas,” says Prasad. “Imposter syndrome is such a common struggle among women and, if you add in the question of if you are only there to make up the numbers, it’s terrible from a confidence perspective.” 

She continues: “And it only reasserts the male suspicion that a woman only has a job because she is a woman – not because of merit.”

However, despite imperfect usage of quotas in the past, more women are beginning to consider them a powerful tool for enforcing thoughtfulness and overcoming subconscious biases. “Hiring is a key part of what we do, and hiring great people is so important in this industry. So, if you aren’t taking out these biases in the hiring process, you cannot be doing a great job for your firm,” argues Grana.

Although quotas rarely strive for 50% of candidates in interviews being women, it’s still normally limited to just one. Indeed, for a lot of women including in structured finance, it has been a common experience to get to a final-round of interviews for a job to only find out you were included to meet diversity requirements for each interview stage.

“Once you’ve tried everything else, quotas start to look good,” states Box. “Quotas are not the opposite of choosing an applicant on merit. If meeting a quota encourages organisations to look at the widest possible range of qualified candidates, then it is a good thing for everyone, isn’t it?”

She continues: “Striving for gender parity does not mean lowering standards; high standards of talent, potential and expertise exist all around us. We just need to look beyond tradition to see them.”

Of course, skills-based hiring and anonymising CVs are considered fairer means of hiring on ‘merit’ rather than using quotas. However, with no single definition for ‘merit’ or a perfect meritocratic system, there is the risk in hiring processes of simply looking backwards, recreating and seeking standards from the past rather than looking forwards.

“Gender is just too blunt an instrument,” states Prasad. “If you’re going to use quotas, you need to look beyond gender to things like social background, race, sexuality and disability too. And even then, asking personal questions in the application process brings up the issue of how relevant these aspects are to having the skills required for a job.”

Sponsorship versus mentorship: keeping it casual?
Efforts to support women in structured finance span from more formal mentorship programmes, forums and quotas, to more informal allyship seen through both mentorship and sponsorship. Sponsorship is considered more important in advancing women’s careers than mentorship, by actively promoting and advocating for junior colleagues, as well as providing opportunities for advancement – and thus it requires strong allyship across the top of the hierarchy at companies.

“Mentorship is not as powerful as sponsorship – part of the reason I think often women don’t advance in the same way as men in the workplace is that there isn’t someone looking out for them. Someone more senior who recognises and nurtures their talent,” suggests Grana.

Indeed, for many senior women in securitisation, progressing in their careers is not simply down to hard work but instead luck – the luck of having proactive support through sponsorship. And more often than not, mentorship and sponsorship are reliant on the support of senior women within the industry.

The more informal approaches require proactivity in recognising potential and can be as simple as volunteering to write a junior colleague’s 360-degree review. Actively considering the advancement and the futures of women as colleagues is essential to negate unconscious biases towards women in the workplace, as promotions are not viewed as being as inevitable or as automatic for women as they are for men.

“It’s important that you are proactive about it. So, if senior women see someone with potential or talent or that may be in the wrong spot, go and talk to them. This is not a zero-sum game. Telling someone that they are brilliant doesn’t detract from you in any way,” says Prasad.

Historically, calling upon women to support other women has proven to be a challenge, due to the very real fears of there being limited opportunities for women across organisational hierarchies – especially at the top. “I’m a big believer in the ‘lift as you rise’ philosophy - and I know many successful women who both advocate and practice this approach,” explains Box. “Yes, we have seen some who have ‘closed the door’ behind them, but many of those were a product of a particular place or time. For example, in organisations that have chosen to see diversity as a ‘one and done’ idea, the competition for the ‘one’ role can be fierce, resulting in women who are afraid to support other women for fear of losing out when only one will be chosen.”

She continues: “The problem is reduced when diversity becomes a business opportunity, not a numbers exercise. We’ve seen the value that women add to our industry; as more of us participate, more benefits accrue to all of us. There’s no reason to close the door on anyone.”

This mindset is shifting, as many senior women who credit sponsorship for their own successes are now going to touching lengths of advocating for women on their own teams, within their own companies and even externally. “Volunteer to promote people and just recognise people – it doesn’t have to be a formal scheme,” urges Prasad. “I interviewed a woman who wasn’t right for the role we were hiring for, but she had so much potential. I stayed in touch, offered to help her with CVs, cover letters and helped put her in the right direction. It can be that simple, and it’s incredibly rewarding when you see people blossom.”

The more senior women become, the less formal sponsorship and mentorship gets – and often, this is when sponsorship is most essential for progressing a woman’s career. However, with men still sitting in the majority of the most senior positions - and most mentoring schemes being non-gender based - they also have an essential part to play in supporting and promoting high-potential women.

“Male allyship is critical not because male guidance is inherently more valuable, but because it offers the opportunity to show egalitarianism and respect for contributions regardless of gender. It’s how men ‘walk the walk’ and not just ‘talk the talk’ with regard to diversity and inclusion. As men and women take that walk together, we create role models that have the power to change unconscious bias and realise the potential that comes with achieving gender equality in the workplace,” says Box.

Yet men remain somewhat stuck between a rock and a hard place when it comes to serving as allies for women in the workplace, as they run the risk of relationships with junior colleagues being misconstrued as favouritism or, at worst, predatory behaviour or sexual harassment. Conversely, given the historic abuses of power by men in senior positions, there is still a real risk for women in their places of work. Therefore, formalising such schemes could be an important step for making it safe for women to receive support in progressing in their careers from more senior colleagues.

For many men who reportedly still find it difficult to speak up on behalf of women and their inclusion across the spectrum of intersectional issues, Grana warns: “That sort of level of discomfort is pretty light compared to what a lot of women and other less-represented groups have to go through.”

Not only are forums for gender diversity becoming more common and better attended, men are increasingly showing up to support in these spaces. However, Grana suggests that welcoming men into safe spaces for women in structured finance should be done to help women be heard and for men to gain greater awareness of the issues faced by women colleagues, not to have men speak for them.

“We need to think about how men can be part of the solution – they don’t have to be the solution, and they probably won’t be. But men should be there to listen, engage and support,” says Grana.

The structured finance industry has been criticised for falling behind in embracing all things progressive – whether it’s digitisation, ESG or indeed diversity. However, much like these other markers of progress, diversity holds the potential to create more opportunity within the market.  

This year, International Women’s Day serves as an important reminder of the long way structured finance still has to go in order to secure inclusion for women in the sector. A key part of this lies within acknowledging the often-overlooked intersectional challenges many women face on top of those of gender.

“Gender can perhaps be the greater of the challenges on a numbers basis – but it is so hard to take one away from the other. Some of these things you can mask – you can’t mask race, you can’t mask disability, and you can’t mask gender. So, add things onto gender and it increases the barriers,” Box concludes.

Claudia Lewis

Structured Finance

SCI In Conversation Podcast: Ruhi Patil, Dentons

We discuss the hottest topics in securitisation today...

In this special International Women's Day episode of the SCI In Conversation podcast, SCI deputy editor Kenny Wastell speaks to Ruhi Patil, a counsel in Dentons' London office, about gender diversity and inclusion in the structured finance industry. Patil discusses her personal experiences of attitudes towards diversity and inclusion; the roles that allies can play in tackling the challenges; the importance of sponsorship and mentoring; the next frontiers in inspiring inclusion; and more.

Patil says she only became aware of the scale of the challenges the industry faces in relation to gender diversity when she developed a more structured thought process around career progression. Patil noticed that, while there is a relatively balanced gender ratio in junior positions, the disparity becomes more apparent when you examine the ratio in senior positions. While much progress has been made in recent years, she says, there remains a lot of work to do to support greater equality in the structured finance industry.

This episode can be accessed here, as well as wherever you usually get your podcasts, including Apple Podcasts and Spotify (just search for 'SCI In Conversation')

Structured Finance

SCI Start the Week - 4 March 2024

A review of SCI's latest content

Last week's news and analysis
Bank bonanza
GSIBs, super regionals and regionals to line up for SRT
Barclays inks 'strategic' credit card sale
Updates on UK bank’s US move, a low-LTV CRT and a Pretium investment
Budding partnerships
Hope for newcomers to tap opportunities in US private-label RMBS
CEE momentum
EIB inks pair of green transition deals
Endgame alarm
Speakers at SFA mull the chances of re-proposal of Basel Endgame
Greater visibility?
SRT Market Update
It's a CIRT
First CIRT of 2024 for Fannie
Job swaps weekly: Starwood to draft in Blackstone exec as president
People moves and key promotions in securitisation
NRA loans on the rise
KBRA updates on US CMBS
Toorak debut
New asset class gets first time rating
US SRT: Unblocking uncertainty – video
Clifford Chance's Gareth Old speaks to SCI about recent developments in the US SRT market
Plus
Deal-focused updates from our ABS Markets and CLO Markets services

SCI In Conversation podcast
In the latest episode of the SCI In Conversation podcast, SCI US editor Simon Boughey speaks to Ian Wolkoff, structured credit and CLO liabilities md at Pretium Partners, about the CLO market’s outlook for 2024. Wolkoff discusses the types of loans that are likely to see default rates tick upwards; refinancing challenges; the high levels of issuance seen so far in 2024 and what it suggests for the year ahead; and more.
The episode can be accessed here, as well as wherever you usually get your podcasts, including Apple Podcasts and Spotify (just search for ‘SCI In Conversation’).

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 Tauseef Asri 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
ESG Leaders’ Securitisation Summit
16 April 2024, London

Emerging Europe SRT Seminar
18 June 2024, Warsaw

2nd Annual Esoteric ABS Seminar
25 June, New York

CRT Training for New Market Entrants
14-15 October, London

Women In Risk Sharing
15th October, London

10th Annual Capital Relief Trades Seminar
16 & 17 October 2024, London

2nd Annual European CRE Finance Seminar
November 2024, London

Capital Relief Trades

SRT buyer

Pension fund reputed to snap up US Bank deal

A pension fund has bought the synthetic securitization of US corporate loans from US Bank which was reported to be in the market last week, according to market rumours.

The transaction has a US$2.5bn reference pool of investment grade corporate loans, add sources.

It was reportedly priced at a spread of 5.75%, which has raised a few eyebrows in the market.

This is at least 400bp inside where comparable deals have priced recently, they say.

It is believed that that the exposure offered by the trade is to high quality corporate names, which accounts in part for the richness of the coupon.

Even so, market participants wondered at the narrowness of the spread.

This is the second deal in the SRT market from US Bank. It sold a debut transaction at the end of last year after the Federal Reserve approved its submission for a CLN on November 17.

Simon Boughey

Capital Relief Trades

Barclays to hit up risk transfer

UK lender looks to offload risk from US card business

Barclays Bank is to use “selective risk transfer” to reduce an increase in risk weighted assets (RWA) due to a migration of portfolio to an internal risk-based model (IRB) calculation of capital adequacy, the UK bank said in its Q4 earnings report at the end of last month.

The US credit card business will be acutely affected by the shift to an IRB model. Top level banks in some jurisdictions can use IRBs to determine levels of capital required and normally this produces results that are less onerous than the standardized version; this is not always the result.

“The Barclays US credit card portfolio is moving to IRB. In most cases capital charges are lower under IRB, but this is one of the exceptions. This is one time where it’s higher, much higher in fact,” says Richard Barnes, the primary credit analyst for a recent S&P paper on growing use of SRT by banks.

According to its investor report on February 20, Barclays estimates the use of IRB modelling will increase RWA density by 60% in 2024 compared to 2023. This is equivalent to an increase of around £16bn by H224 across 85% of the portfolio.

It added that its US-based card business will suffer additional credit and operational risk charges as a result of the Federal Reserve’s implementation of Basel III. Consequently, it aims to make use of the risk transfer market and manage its credit lines and risk models “based on new IRB requirements.”

The bank is already taking steps in that direction. Last week it announced it had sold US$1.1bn of US credit card receivables to Blackstone. “This is the first in a series of activities Barclays plans to conduct to reduce its RWAs and create additional lending capacity for Barclays Bank Delaware,’ according to the press release.

This sale is expected to free up £1bn of RWA, it added. It is not yet known how large the reference portfolio of the intended SRT deal will be, or when it will go to market. 

The S&P report notes that US banks have become more active issuers of SRTs since the Fed clarified guidance concerning regulatory capital relief possible through CLNs last September, but adds that it is not clear whether the much-criticised Basel III endgame will incentivize or discourage further issuance.

On the one hand, capital requirements on assets like loans are set to rise substantially. On the other, they are also set to rise on securitized transactions. Which one outweigh the other?

Under Basel III, the new output floor provides a limit on the capital reduction the IRB models can attain versus the standardized approach. This may well undermine the economic rationale for SRTs as issuers would be required to sell thicker tranches to achieve the capital result desired, which makes issuance costs higher.

“This concern is particularly relevant to issuers that calculate regulatory capital requirements according to the standardized approach,” notes the S&P report. This category now includes virtually all US banks, according to the rules of Basel III endgame released at the end of July.

This replaced the IRB approach with a new “expanded risk-based approach” and requires large banks to be subject to the more burdensome of this or the standardized approach.  The aim is to “reduce the ability of firms to use internal models for measuring capital requirements, as such models can result in unwarranted variation in requirements across firms,” explained the Fed in a memo to the governors.

Simon Boughey

SRTx

Latest SRTx fixings released

Index values indicate expectations of rising volatility and tempering in positive sentiment around liquidity, while large corporate spread indexes tighten

The latest fixings for the SRTx (Significant Risk Transfer Index) have been released. There has been some incremental tightening in the spread indexes in the large corporate category compared with February’s fixings (SCI 5 February). Volatility indexes have risen, reflecting more volatile conditions in the broader capital markets.

SRTx Spread Indexes have modestly tightened in the large corporate category (-7% in Europe and -8.4% in the US), in line with a similar trend last month. However, index values in the SME space remain broadly unchanged month-on-month (+0.2% in Europe and -0.7% in the US).

The SRTx Spread Indexes now stand at 965, 807, 1,110 and 1,228 for the SRTx CORP EU, SRTx CORP US, SRTx SME EU and SRTx SME US categories respectively, as of the 4 March valuation date. 

In a reversal of last month’s survey responses, SRTx Volatility Index values have risen incrementally across the board and now indicate expectations of modestly higher volatility. All values rose from the high 30s and low 40s in February to the mid 50s this month, with changes of between +28.6% (SRTx CORP VOL US) and +46.7% (SRTx SME VOL US).

The SRTx Volatility Index values now stand at 56, 54, 56 and 55 for the SRTx CORP VOL EU, SRTx CORP VOL US, SRTx SME VOL EU and SRTx SME VOL US indexes respectively.

On the liquidity front, the SRTx Liquidity Indexes also indicate some tempering in the positive outlook from February, with all values rising month-on-month but remaining biased towards positive sentiment overall. European large corporate and SME values rose most significantly (+33.3% and +42.2% respectively), while US SMEs saw the lowest rise in index value (+6.7%). Positive sentiment around US large corporates also tempered significantly (+22.4%).

The SRTx Liquidity Indexes stand at 42, 36, 44 and 40 across SRTx CORP LIQ EU, SRTx CORP LIQ US, SRTx SME LIQ EU and SRTx SME LIQ US respectively.

In contrast, The SRTx Credit Risk Indexes indicate improved expectations for credit risk outlook. All values have lowered from the 55-60 range seen last month to the 50-53 range, with index values for US large corporates seeing the highest drop (-14.3%) and European large corporates seeing the most modest fall (-6.2%).

The SRTx Credit Risk Indexes now stand at 53 for SRTx CORP RISK EU, 50 for SRTx CORP RISK US, 53 for SRTx SME RISK EU and 50 for SRTx SME RISK US.

SRTx coverage includes large corporate and SME reference pools across the EU and US economic regions. The index suite comprises a quantitative spread index - which is based on survey estimates for a representative transaction (the SRTx Benchmark Deal) that has specified terms for structure and portfolio composition - and three qualitative indexes, which measure market sentiment on pricing volatility, transaction liquidity and credit risk. 

Specifically, the SRTx Volatility Indexes gauge market sentiment for the magnitude of fixed-spread pricing volatility over the near term. The index scale is 0-100, with levels above 50 indicating a higher proportion of respondents estimating volatility moving higher.

The SRTx Liquidity Indexes gauge market sentiment for SRT execution conditions in terms of successfully completing a deal in the near term. Again, the index scale is 0-100, with levels above 50 indicating a higher proportion of respondents estimating that liquidity is worsening.

Finally, the SRTx Credit Risk Indexes gauge market sentiment on the direction of fundamental SRT reference pool credit risk over the near term. The index scale is 0-100, with levels above 50 indicating a higher proportion of respondents estimating that credit risk is worsening.

The objective of the index suite is to depict changes in market sentiment, the magnitude of such change and the dispersion of market opinion around volatility, liquidity and credit risk.

The indexes are surveyed on a monthly basis and recalculated on the last trading day of the month. SCI is the index licensor and the calculation agent is Mark Fontanilla & Co.

For further information on SRTx or to register your interest as a contributor to the index, click here.

Kenny Wastell

Structured Finance

Unlocking potential

Embrace neurodiversity to drive success in securitisation

Neurodiversity is gaining more recognition as a crucial component in the pursuit of gender diversity and inclusion in structured finance. This year’s theme of ‘inspiring inclusion’ for International Women’s Day underscores the imperative to address the hidden challenges women face on top of gender. 

The rising numbers of later-life diagnosis of Attention Deficit Hyperactivity Disorder (ADHD) and Autism Spectrum Disorder (ASD) in women highlights the need not only to support neurodiverse women, but the importance of including neurodiverse women in structured finance.

Of the total one percent of the world’s population understood to exist on the autistic spectrum, women make up a very small proportion of those with a clinical diagnosis. In fact, the ratio of males to females diagnosed with ASD presently sits at around 4:1 – although mathematical models predict the reality to be closer to 3:4. 

The gender divide in the diagnosis of ASD and ADHD is reducing as the number of adult women seeking diagnosis is on the rise. Lockdown served as a catalyst for many women in recognising their neurodiversity, as conversations on the presentation of ADHD and ASD in women ramped up worldwide.

“Coming out of lockdown, I just noticed that there was so much more sensitivity to noise, to light, to crowds, to people,” shares Naomi Prasad, director at Pemberton Capital Advisors, on her recent autism diagnosis. “I know everyone was affected by lockdown, but some of my reactions were unusually extreme.”

She adds: “I questioned why things were not getting to most people like they were getting to me. Why was I being so intolerant? And when I began reading around various things, a lot of traits seen in autistic women were ringing bells with me – but by myself, it was hard to tell whether it was just positive bias or not.”

Neurodiversity is an important component in establishing inclusion for women not only because of the challenges, but the unique strengths neurodiverse individuals can bring to structured finance.

 “In securitisation, autism can almost be a superpower,” explains Prasad.  “I love being a CLO corporate credit analyst because I get to look at completely new things every day – you can go from looking at a company that makes ceramic hip components one day, to a water company the next. It feeds that constant intellectual curiosity so common with neurodivergent people. And being neurodiverse makes people creative, it gives us the ability to think laterally - making us good at problem solving because we’re constantly probing and testing.”

Prasad continues: “And that’s great for securitisation, because it’s finding that extra level of how can we do this a little bit better? It’s not just numerical pattern spotting, but it’s finding trends too. It’s important to have these different perspectives, people looking at things from a slightly different angle – and I think all of those things are incredibly valuable in securitisation.”

A primary reason why women so often go undiagnosed earlier in life is their ability to ‘mask’ – the ability to act like non-autistic, neurotypical friends and colleagues. However, this additional cognitive burden of embodying a neurotypical person can have serious ramifications on the mental health of women with autism – no matter how successful they are at masking, or indeed in their personal and professional lives.

Prasad says: “What really triggered it for me was that separate layer of cognition that you have going on when you’re autistic. For women, from a very early age you’re working on two different levels, there’s what’s going on in your head and how you present – and you just assume that everyone’s like this.” 

While masking is a common feature of autism in women, every individual with autism presents differently – each facing their own challenges, as well as possessing their own unique skillsets and abilities. However, many women go without ASD and ADHD diagnoses as a result of the medical field’s historical failing of basing the understanding of most mental and physical health conditions solely on their presentation in white males. 

Cultural misunderstandings of the presentation of neurodiversity in women prevail too, as Prasad attests: Because people are so used to autism being diagnosed in boys and men, there’s a lack of understanding around it – there is an enormous range, we present in almost infinite different ways - but I think that’s just going to take time.”

Much like ASD, ADHD commonly goes undiagnosed in women until adulthood as a result of their unique ability to mask. The gender disparity in the understanding of ADHD begins young, with boys being more than twice as likely to be diagnosed than girls in the US. Worldwide, 2.6% of adults are understood to experience persistent ADHD from childhood. However, the misunderstanding of ADHD itself as presenting solely through hyperactivity makes it harder for girls with ADHD to be taken seriously given their tendency to be less outwardly disruptive in school.

Despite the importance of the inclusion of neurodiversity in the securitisation profession, neurodivergent women continue to lack support and accommodation they need to succeed at work as a direct result of the universal failure to understand neurodiversity in women.

Late-life diagnosis
80% of autistic females in the US remain undiagnosed by the age of 18 - despite the presentation of neurodiversity in both men and women being evident from early childhood. However, society’s conditioning of young girls often also means that women with ADHD and autism have the challenges they face underestimated due to masking. 

“As women we just don’t get diagnosed because we learn from very early on to camouflage, to mask and to present – and that is what society teaches all little girls to do is to go along with things, be nice, be compliant,” explains Prasad.

Going undiagnosed into adulthood can have severe negative consequences in both the short and long term on the mental health and wellbeing of women and girls. Neurodiverse women often go misdiagnosed for much of their lives with other mental health struggles like anxiety, depression and mood disorders.

Perhaps unsurprisingly, individuals with ASD and ADHD face very high rates of comorbid mental health disorders – including each other. In fact, the overlap of the two is vastly common, with somewhere between 50% and 70% of people with ASD also meeting the diagnostic criteria for ADHD – a phenomenon often referred to as AuDHD.

Of course, actually accessing a diagnosis either for ADHD or ASD presents its own challenges, with years-long waiting lists for NHS referrals in the UK only getting longer, and extremely costly private assessments also seeing individuals waiting for months. Even then, medication shortages continue to disproportionately affect individuals with ADHD in the UK, impairing not only their ability to work but also having a detrimental impact on their mental health.

Statistically, women with autism face a greater risk of suffering from stress-related illnesses and suicide as a result of the failure to recognise their differences and understand their needs.  The common experience of ‘autistic burnout’ led many women in the face of heightened stress and routine disruption in lockdown to discover that they were in fact neurodiverse.

Prasad says: “A lot of women get diagnosed later in life because there is this cumulative load of exhaustion because you’re running in that extra cognitive gear – and quite often what happens is that women encounter a series of stressful events and get to the stage where they can’t do it anymore.”

Broader societal misconceptions and stigmas related to neurodiversity have led to much sensitivity on the subject of labelling. However, for many women seeking a diagnosis in later life, it is not so much about the label, but rather about receiving an explanation for a lifetime of unexplained symptoms and differences from peers. 

“Having the diagnosis was such a relief – it explained so much, it answered questions that psychotherapy couldn’t answer because it was autism. Seeing a pattern, especially in the workplace and with my career which was massively helpful,” states Prasad.

Understanding can be beneficial in securing support and creating better working practices for neurodiverse people, as well as knowledge of the accommodations workplaces can make for neurodivergent women. Reasonable adjustments that can make workplaces more autism-friendly range from introducing training for managers and teams about autism, to supporting individual autistic workers through providing extra breaks, access to quiet spaces and specific support through unavoidably disrupted or heavy periods of work.  

“I’m less bothered about labelling than others,” says Prasad. “But I think one of the biggest challenges is getting people to take me seriously. I’m incredibly lucky at Pemberton. They have been brilliant – so open to learning and wanting to learn more about it, how to support myself and other neurodivergent people and how to accommodate.”

Nevertheless, women remain less forthcoming with sharing their diagnosis in the workplace than men, including in structured finance. A fundamental hurdle women face is the questioning of the validity of their later-life diagnoses, as increasing recognition of neurodiversity in women is increasingly being looked down upon as a ‘trend’ rather than a movement addressing a long-ignored issue.

“You tell people and they just don’t believe you,” says Prasad. “I’ve had very senior psychiatrists not believe me. I don’t want to have that debate with everyone, and while I think you have to accept that people aren’t going to believe you, it only furthers the undermining of yourself. I am really good at hiding it, and there’s a lot of self-doubt and anxiety that comes with a later-life diagnosis – and being questioned all the time doesn’t help.”

Fostering inclusive workplaces
Looking ahead, Prasad emphasises the importance of openness in fostering more inclusive workplaces and seeing greater accommodations for neurodivergent women in securitisation.

“I think it’s the women and men who are saying they are neurodiverse in some way,” says Prasad. “And for people who are not used to working with you to realise that actually it’s not a complete nightmare. I think as that grows and accumulates and people are used to working with people who are openly neurodiverse [there will be progress]. We saw this happen with gender, with things like maternity leave and flexible working – we adapt, we evolve – which is why I think we should be open about it, because that’s how things change for the better.”

Indeed, the structured finance industry has been credited with undergoing immense transformation in recent decades – with improving attitudes towards gender-related inclusivity and addressing intersectional challenges such as neurodiversity. 

Prasad says: “There’s definitely a willingness, but I think a lot of it depends on the culture, because that culture can simply be a box-ticking exercise for the benefit of shareholders – it can still feel like a chore.”

However, when it comes down to addressing gender diversity and the intersectional challenge of neurodiversity, Prasad considers gender still the harder barrier for women in structured finance to overcome.

“Gender has been so much harder to overcome,” states Prasad. “In the securitisation world you will encounter the highly achieving neurodiverse people, many of whom have gone through decades of their careers without even knowing they’re neurodivergent, like myself. Especially in securitisation, where people are fixated on research, detail, numbers – it naturally suits neurodiverse people. But gender has been a bigger hurdle.”

Embracing inclusion is not a distraction from the everyday business of securitisation, but rather a cornerstone of enhancing the success of that work. By establishing inclusion, organisations in structured finance not only secure more supportive workplaces for neurodiverse women, but unlock diverse talents and perspectives essential for driving innovation and success.

“The most important thing to remember is that we are ultimately on the same side,” says Prasad. “Everyone’s got something going on, but at the end of the day we all want to succeed, and we all want to see the places we work succeed. We spend a lot of time at work, so try and make it a better place for everyone, try and be a bit more open-minded and accommodating.”

And for fellow neurodivergents, Prasad advises: ”If you’re looking to get diagnosed, it’s important to read as much as you can and try to be open-minded. Try and find an ally or a mentor in the office – someone who gets it.”

She adds: “The common thread amongst neurodiverse people is the sensitivity – it’s not that we don’t feel, rather that we feel too much. Focusing on routine, taking mundane decisions away from yourself can be helpful. It’s about finding ways to manage your life and make things easier. And try and remember that being neurodiverse and being female is brilliant. We contribute so many different things.”

Claudia Lewis

Structured Finance

Ares forms equipment financing shop

Market updates and sector developments

Ares Alternative Credit has launched Ansley Park Capital, a newly-formed lending and specialty finance company that delivers full spectrum, customised financing solutions for essential-use, large-ticket equipment. Ansley Park’s management team and integrated operating platform were acquired from BciCapital, the equipment finance business of City National Bank of Florida.

Ansley Park will offer scaled, flexible equipment-based capital solutions ranging from US$5m to over US$100m to a diversified array of industries, including manufacturing, rail, construction, marine, infrastructure, energy, healthcare and corporate air travel. Ares Alternative Credit funds have committed approximately US$400m in initial equity capital to support originations, which the team expects to be in excess of US$3bn. In addition to direct financing originations, Ansley Park intends to partner with banks in executing capital markets transactions, acquire equipment finance portfolios, develop structured flow programmes and design equipment-focused balance sheet optimisation and capital relief solutions.

Ansley Park is led by seasoned industry executives, including Eric Miller, Mark Trollinger and Robert Seltzer. Members of the executive team have worked together for over 20 years and bring combined experience of over 150 years in commercial, risk, finance and operational executive roles.

Miller will serve as Ansley Park’s president and ceo, having most recently served as ceo at BciCapital. Trollinger will serve as Ansley Park’s cio and head of capital markets, having most recently served in the same role at BciCapital. Finally, Seltzer will serve as evp and head of direct originations, having previously served as the chief commercial officer for BciCapital.

In other news…

EOS, Veld ink consumer loan deal
Veld Capital and the EOS Group have acquired a portfolio of regulated French consumer loans from BNP Paribas Personal Finance via a securitisation vehicle funded jointly by Veld and EOS, with the servicing being migrated to EOS for management. The €364m (nominal value) portfolio is highly granular in nature, containing over 125,000 small balance French consumer loans with an average balance of under €3,000.

The portfolio has strong, stable cashflow from amortising loans with affordable monthly payments and a weighted average seasoning of over two years. As a result of these characteristics, the underlying assets demonstrate high payment predictability and stability.

With this transaction, Veld and EOS have further strengthened their operating partnership, having previously co-invested together in a number of European jurisdictions and asset types. EOS France, a subsidiary of the international EOS Group, has more than 30 years of experience in the purchase and servicing of receivables portfolios within the French market.

Leveraging extensive relationships and product expertise developed as a solutions provider to European banks over its 14-year history, Veld primarily targets granular, amortising and asset-backed investment opportunities, benefiting from data-rich underwriting where it can utilise internal expertise as well as comparable proprietary data.

M&B bucks WBS decline
Debt ranking and a combination of industry and company risk profiles are the key differentiating factors between rated UK whole business securitisations, Fitch says in a new report. The report compares the agency’s UK WBS peer group in terms of qualitative key rating drivers, financial metrics and rating positioning.

The Fitch report shows that industry profile is driven by operating environment and barriers to entry, while the company profile is mainly determined by financial performance and asset quality. Protective debt structural features - including fully amortising debt structures, comprehensive security packages, cash lock-up provisions and dedicated issuer-level liquidity facilities - support the rating level.

The majority of UK WBS transactions are in the pub and leisure sectors, but tower business or funeral homes and crematoria also feature. The pub and leisure sectors are exposed to demand risk and discretionary spending, with other WBS sectors less exposed to these factors.

Fitch notes that company risk profiles have evolved, leading to several downgrades in the past decade, particularly in sectors exposed to discretionary spending. However, pubs with managed operating models are viewed as more adaptive and transparent than leased/tenanted pubs, due to their full control over operations.

The agency cites M&B - the only pub company in its portfolio with a ‘stronger’ company profile assessment, reflecting the fact that it is a large operator of restaurants, pubs and bars in the UK – as an example. Almost all of M&B’s securitised estate is managed pubs and the company has a long record of maintenance capex in excess of the covenanted level.

The company’s trading history (2006-2019 CAGR per pub of 2.9%) has been resilient to declining UK pub industry fundamentals. Although revenue growth was severely affected by the pandemic, management acted swiftly to control costs and enhance liquidity, raising £350.5m equity at the group level.

Corinne Smith

Structured Finance

Job swaps weekly: Cadwalader appoints former FDIC deputy general counsel as partner

People moves and key promotions in securitisation

This week’s roundup of securitisation job swaps sees Cadwalader appoint an industry veteran as a New-York-based partner. Elsewhere, Willkie Farr & Gallagher has snapped up a Katten Muchin Rosenman partner for its energy transactions and structured finance team, while Paul Hastings has lured a McDermott Will & Emery partner to its real estate team.

Cadwalader has recruited former FDIC deputy general counsel Andrew Karp as a partner, based in its New York office. He has over 25 years of experience in financial law and regulation, with leadership positions in government, global banking and private practice. Among the practices at Cadwalader that will benefit from Karp’s arrival is the firm’s capital relief trades (CRT) practice, which represents market participants in connection with all manner of bank capital relief trades across a broad range of risk-weighted asset classes.

Meanwhile, Don Macbean has joined Willkie Farr & Gallagher as a partner in its New York office, with a focus on energy transactions and structured finance. Macbean joins the firm from Katten Muchin Rosenman, where he spent 10 years, most recently in the role of partner. He previously spent seven years at Linklaters.

McDermott Will & Emery's David Broderick has joined Paul Hastings as a real-estate-focused partner in its New York office. Broderick focuses on debt, equity and structured finance transactions spanning mortgages, bridge and mezzanine financing, construction lending, debt syndication and preferred equity. He leaves his position as partner at McDermott after six years with the firm.

Roundshield’s Kristina Kuhnke Denaro has joined Monarch Alternative Capital as managing director in its business development department. Denaro leaves her position as a partner at Roundshield after five and a half years at the special-opportunities-focused firm. Sitting within its opportunistic credit and distressed debt division, Monarch’s structured credit strategy invests across RMBS, CMBS, CLOs, EETCs, and other securitised assets.

Assured Guaranty has appointed Melissa Gribble to its business development team in Sydney, as it seeks to expand its reach across the Australian market. Gribble brings more than two decades of senior banking and capital markets expertise to the role, and will report to UK-based md and joint head of origination, Suparna Dar. Gribble joins Assured Guaranty from DeltaPeer where she served as ceo, and will be responsible for the firm’s origination activities in Australia.

Industrial commodities business Klesch Group has appointed Michael Fitzgerald as head of structured finance, based in London. Fitzgerald leaves his role as senior portfolio manager at Kimura Capital after eight years with the firm. He previously worked at Noble Group, Armajaro and Natixis.

FNB South Africa has hired Verushka Ramdial as a portfolio manager in its structured finance solutions: debtor finance team, based in Gauteng, South Africa. Ramdial joins the bank after 19 years at Nedbank, most recently in the role of operations and admin manager for debtor management. 

Northmarq has recruited Justin Glasgow to lead its national student housing capital markets practice. Joining the firm in Washington DC, Glasgow will lead the new speciality group’s investment sales, agency and non-agency finance, and equity placements for institutional investors. Glasgow holds more than 20 years of experience in real estate, and joins Northmarq from CBRE where he was a partner.

Fitch Ratings has promoted Sara Slicklen Cherami to senior director in its structured finance ABS business and relationship management team, based in New York. Slicklen Cherami is promoted from director, having joined the agency in 2014.

And finally, Crédit Agricole CIB has hired Santander CIB’s Alfredo Sanz Marín as vp for structured finance - energy and real assets. Sanz Marín leaves his position in the European renewable project and acquisition finance team at Santander after five years with the bank. He previously worked at BBVA.

Kenny Wastell, Claudia Lewis, Corinne Smith