Contents

Capital Relief Trades

No endgame in sight

SRT market update

Optimism around the wave of US CRT deals expected during Q3 is fading with the outcome of the Basel 3 Endgame still unresolved.

Commenting on the matter, one source explains: “At the start of this year people were saying 2024 was it – this is happening – but I don’t think people were expecting there to be this much grit in the regulatory machine. While regulators have opened the gates to it, they haven’t changed the capital rules in order to really incentivise issuance.”

To add to this uncertainty, market insiders are additionally waiting for the November presidential election. There is no question the endgame will change, but the question is how much. The Democrats won’t implement it as it is and the Republicans have very little appetite to increase capital requirements.

Such indecision has caused – amongst other factors – spreads to tighten in Europe, with SRT investors who tooled up to tackle the US market turning their attention to Europe. However one investor notes: “I think there’s live situations in US CRT, but generally there are very few transactions, usually one per year per bank.”

They add that while the European market has many established programmes, which gives investors a clear indication as to when deals may be coming to market, in the US “you tend to get a call and then all of a sudden a rush to complete” which could lend to the perception of a slowdown.

Of the large banks Citi and US Bank have already issued this year, the latter having done so twice. JPMorgan has issued every year since 2019. Several market insiders expect JPMorgan to issue again but no concrete details have emerged thus far.  

Joe Quiruga

Structured Finance

Job swaps weekly: Reed Smith snaffles top hire

People moves and key promotions in securitisation

This week’s roundup of securitisation job swaps sees experienced structured finance lawyer Jeffrey Stern join Reed Smith as a partner in the Financial Industry Group based in New York. The practice includes CLOs, litigation pre-settlement funding, consumer loan finance, equipment loan finance, music royalty finance, financing and securitization of insurance-related assets and specialty finance.

Stern has more than 30 years’ experience in structured finance and derivatives, including working in Latin America and the Caribbean for 20 years with a focus on cross-border assets and cash flow financings. His previous role was co-head of the structured finance practice at Winston & Strawn.

Stern’s arrival occurs several weeks after former GE Capital deputy general counsel Josephine Chang joined Reed Smith in the New York finance practice.

The firm’s broad structured finance capabilities encompass cross-border and cross-jurisdictional issues, including bonds, CP and MTNs, while it also advises on a wide range of securitized assets, intercreditor agreements, project bonds, Islamic bonds, high yield debt, convertibles and structured note programmes.

Meanwhile, UK mortgage specialist LendInvest has appointed Stephen Shipley as chief financial officer. The firm's interim cfo, Hugo Davies, will return to his original role as LendInvest's chief capital officer, and will also assume responsibilities as the md of the mortgages division.

Shipley brings over 30 years of experience to the role, gained from his previous work at various companies, including Barclays and Foundation Home Loans.

The firm has also recently restructured its team to a 200 employee headcount, with payroll costs reduced by about 25% per year.

Simon Boughey