News Analysis
Capital Relief Trades
SRT Journal: LatAm as the new emerging market
The last of five essays compiled in SCI's inaugural SRT Journal explores Latin America's burgeoning SRT market
Thanks to trailblazing deals issued by Santander, the Latin American (LatAm) SRT market is open for business and is perhaps the sector’s most promising emerging market. Enabled by multilateral development banks (MDBs), Santander has completed at least three transactions in two years with deals in Brazil, Mexico and most recently the SCI Award-winning Project Patagonia transaction in Chile.
Looking back, SRT is not entirely new to the region, but is instead gathering steam after a long period of dormancy. As Mascha Canio, head of credit and insurance linked investments at PGGM, explains: “In 2007 we did an SRT transaction in Brazil with Banco Real, who was part of ABN Amro Bank. Of course, a lot happened in the meantime with the GFC and other events.”
Jurisdictions where SRT is relatively untested pose different challenges to those experienced in established markets. How does a new issuer or investor navigate a regulatory environment still in development, deal with risk and establish relationships with key stakeholders?
Regulations
It is helpful to look at LatAm’s SRT market less as one homogenous region like Europe, and instead as one divided along regulatory lines. Among the jurisdictions where transactions have been completed, some have securitisation rules in place and some do not.
In jurisdictions where the rules have been implemented, LatAm transactions look very similar to their European counterparts. As Edmund Parker, partner at Mayer Brown, explains: “Where the Basel 3 capital rules are implemented, you can structure a synthetic securitisation referencing an asset class, creating an unfunded CDS guarantee from a multilateral institution, and tranche it to achieve better regulatory capital.”
This is not to say that it is impossible to do deals in jurisdictions without the Basel 3 rules; however, these can only be done by multinational banks to achieve capital relief on a group level – similar to how SRTs were undertaken on Norwegian assets prior to the implementation of the SecReg in the EEA, but only by multinational banks with assets in the jurisdiction and not by local players with no cross-border presence.
Parker adds: “Obviously, if you don’t have the rules in place at a jurisdictional level, you can’t get capital relief at a local level. Institutions can sometimes find it worthwhile to do the deals even without the rules in place, if the capital relief obtained at group level is sufficiently appetising.”
This can create barriers to getting a market up and running. Xavier Jordan, chief investment officer of global capital markets at IFC, explains: “A fundamental reason that Europe is so effervescent is that entities like the ECB create overarching multi-country regulatory frameworks. As such, issuers in other regions including LatAm have to rely on single country regulatory scaffolding.”
European banks who have issued the asset class successfully in Europe therefore join with MDBs like the IFC to open up new jurisdictions.
Another key barrier caused by the lack of an ECB-like regulatory body is that regulators can (and have) changed their minds about SRT. Mexico had SRT rules in place in 2018 when Santander completed its first transaction in the jurisdiction. By the time the second rolled around, Mexico had repealed them.
Therefore a lack of securitisation rules does not make doing deals impossible, but having them in place does make it easier. As Parker explains: “Brazil has implemented rules allowing for capital relief where there is a credit risk mitigant or an unfunded guarantee from a multilateral institution. This provides an enormous opportunity for issuance.”
Practical considerations
Emerging markets demand more consideration than established ones. Among these is how the regulatory environment evolves from its infancy into a system which enables SRT transactions to take place.
Parker says that where local rules track European CRR legislation it can be helpful for issuers to have a trusted European counsel who can facilitate a strong relationship with either local counsel or the local regulator. This allows guidance to be provided to the local regulator as to how gaps are dealt with under the corresponding European rules. Jurisdictions which are yet to see transactions can benefit from looking to the European framework. For example, the EBA’s published Q&A on CRR provides publicly available regulatory interpretations of many aspects of regulatory capital rules, which can be most helpful to any local regulator as it forms its own views.
Parker further explains: “The rules in Europe are massive and complicated. CRR itself is hundreds of pages long, and it is supplemented by technical standards, guidelines, EBA reports and Q&As. New jurisdictions might have only have a fraction of that detail implemented. Having an insight into how the same issues have been dealt with in Europe can greatly benefit a local regulator looking to improve its first few synthetic securitisations.”
He adds issuers should be careful in choosing their counsel on this: a tactful and helpful approach, which points to helpful provisions in Europe, is likely to be most successful.
For investors, the attractiveness of SRT is the same in LatAm as it is elsewhere. Canio explains that for PGGM: “SRT allows you to access exposure to assets you typically can’t find elsewhere, because of the types of clients that banks have, such as corporate clients and revolving credit facilities. There is a lot of operational hassle with clients being able to withdraw and prepay, etc. This doesn’t fit well with how institutional investors are set up, but it’s an interesting product to have exposure to.”
Another interesting element for PGGM is the multiple contact points SRT issuers have with borrowers. “Term loan and bond investors have a more limited flow of information, and hence we see value in that which we typically see reflected during due diligence.” The risk-return profile is also of interest, as is the change SRT issuance can ignite through conditions such as ESG requirements attached to transactions.
Then there is the inevitable matter of patience. Deals in new jurisdictions can, and often do, take years between inception and completion. Investors need to be as generous with their time as they are with their cash in such scenarios: “Where possible, I think you do want the regulator to allow for capital relief, which requires the regulator to understand the product and put up a framework to support it. This takes time.”
Although this is not a role investors are expected to take, Canio finds that involvement in the process can be helpful: “The relationship between regulators and banks is like an enforcer, so there’s a general mistrust between the two. The investor can help remove some of that mistrust if it has been involved in the market for a number of years. In the end, all three parties - the issuer, the regulator and the investor - need to agree on the majority of points for these transactions to work.”
What about MDBs?
As it does in Central and Eastern Europe, the IFC is playing an important role in opening up the LatAm market. The MDB can front up to 100% of protection on an underlying credit portfolio and then syndicates junior risk associated with the latter to other investors. Alternatively, it can and does invest in mezzanine tranches directly – with the possibility of doing so with the junior tranche on the horizon.
Jordan explains how the former alternative works: “Multilaterals could take SRT technology and graft it onto vanilla risk sharing. If we can identify someone to take the riskiest capital portion, it enables us to do much more business than might otherwise be the case in certain circumstances. If you work with smart investors in this way, and there are quite a few who are very interested in diversifying beyond Europe, it can bring a lot of value to the market.”
The value goes beyond the monetary. Parker points out that an MDB’s guarantee on a slice of the reference portfolio makes for an easy-to-understand structure compared to the more intricate SPV model. This improves the explainability of the product, which is of paramount importance when convincing regulators of its merits.
He notes: “This comes down to having fewer defined regulations. When you have quite light rules, simplicity is best.” Parker adds that MDBs tend to have good understanding of the region and are well-placed to assess credit and reference portfolios.
The guarantee can also encourage the involvement of investors who may otherwise be unable to participate. As Canio explains: “For us, one challenge is we do put up cash while we don’t want to take the credit risk to the issuer, and therefore the collateral needs to be very highly rated. That’s where an MDB could come in to guarantee or to issue collateral in, for example, Mexican pesos.”
The IFC also pursues a developmental impact angle to its transactions. Jordan summarises the role of the IFC like this: “We fundamentally prefer to introduce new asset classes and always need to have a thematic impact narrative in the investments we make. We introduce debut transactions to the market and also regulators to the product, to the extent it’s necessary. Once the first deal is complete, we can continue to be a strategic investor in the space - to the extent where we add new dimensions to it, in terms of development impact, as far as redeployed RWA/capital is concerned.”
The impact narrative is a another key consideration for the IFC, according to Jordan: “ESG is a twofold issue. We cannot take exposure to ESG eruptions in reference portfolios – which means SMEs are tactically advantageous as there’s less ESG risk in the asset class than, say, infrastructure. We also have the impact we want to make – if it’s SME loans we might encourage more SME lending, on other portfolios we might encourage more green lending, or if the underlying asset class is ESG loans to start with then sustainability features are already likely baked into a reference portfolio.”
Jordan says the key themes IFC likes to focus on for the moment are the environment, gender and SMEs. Sometimes the jurisdiction pushes the IFC towards one of these aims, for example in Poland a lot of energy is generated by coal in a time when much of Europe is seeking to transition to renewable energy, making low-hanging fruit of an environmental focus. “Project Patagonia” in Chile frees up capital for women-only mortgages.
However the bank ultimately decides which ESG target to assume: “We can’t jam a thematic lending story down their throat. We typically sit down with the bank and set out our priorities and ask what theirs are. But to a certain extent we’re leaning on an open door, as ESG imperatives are not something we have to convince a lot of banks to consider seriously.”
He adds there is an incentive which keeps issuers “on-target” in terms of RWA/capital redeployment trajectories. In the majority of cases, the IFC does deals with WALs of 3-4 years, meaning capital relief needs to be extended. “If things aren’t on a positive trajectory, we won’t be particularly amenable to such extensions.”
The future
In addition to Mexico, Chile, and Brazil, Colombia and Peru are additionally considered to be of interest for issuers. This is mostly driven by US banks which either already have a presence in LatAm or which desire to advise or act on behalf of issuing banks in the region.
Parker explains: “The interest we’ve had from US clients is palpable as that’s where a lot of LatAm desks tend to be, partially because of dollarisation. Arranging a transaction on behalf of a local bank in LatAm could be appealing.”
He has previously said Brazil has the potential to reach the volumes seen in European jurisdictions like Poland and Austria.
Canio explains what investors would look for in a new market: “We would really look at the institution itself first – their market standing and the size of the book. That’s very important. Where the bank is, because there are some countries like Venezuela where we don’t want to have any exposure. You want a relative level of economic and political stability, because there are some countries where the risk isn’t worth it.”
In general, the rule of thumb seems to be large economies as well. The exception to this rule seems to be Argentina. Suggestions that economic reforms by its current president would make the market more investable were met with the cold shoulder. It will likely be considered off bounds until it reaches long-term political and economic stability.
In short, LatAm has gathered steam as the emerging market to watch, overtaking Asia and the middle east which had been considered the next big thing besides the US. Canio says that LatAm may currently be the most promising emerging market for SRT in terms of jurisdictions which have completed transactions – although she adds “We’ve been working on more than just LatAm – I think they’re all exciting”.
For Jordan, Asia is especially worth considering: “Japanese banks already use this product. While the banks are well capitalised, you might see them take an interest on behalf of their emerging market franchises. For example, a bank in Singapore may be interested in achieving group-level relief for subsidiaries in, say, Indonesia. You could also see Japanese banks buying protection on regional portfolios. This is me guessing the future, but outside of the very sophisticated South African banks, Asia is the best shot.”
Joe Quiruga
SCI’s SRT Journal is sponsored by Arch MI and Mayer Brown. All five essays can be downloaded, for free, here.
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News Analysis
ABS
Cruise control: Stable outlook for ABS and MBS in 2025
JP Morgan strategists predict stable European, UK and Australian ABS/MBS markets in 2025, despite global challenges
As we approach 2025, strategists at JP Morgan foresee a year of steady performance for the ABS and MBS markets across Europe, UK and Australia. While 2024 set records for issuance volumes, the outlook for 2025 reflects a cautiously optimistic tone amid global uncertainties.
JP Morgan’s research highlights that 2024 was a landmark year, with European ABS issuance reaching €89bn, a 16% increase over the previous post-crisis record. For 2025, the bank forecasts €85bn in European issuance, maintaining elevated levels but acknowledging some potential drags. “We see 2025 as a year where the securitisation market builds on the structural improvements of recent years,” note JP Morgan strategists.
However, factors such as lower scheduled redemptions and evolving geopolitical tensions could moderate the pace of growth. “While redemption volumes are expected to dip, the solid demand for securitisation products, especially STS-compliant bonds, should keep the market active,” the strategists add. They also see continued diversity in issuance as a positive signal for the market’s health, with both bank and non-bank participants contributing significantly.
In the UK, the market’s reliance on prime RMBS is expected to persist, with projected issuance of €12bn for 2025. This aligns with the ongoing need for banks and building societies to refinance significant borrowings under the Bank of England’s Term Funding Scheme (TFSME).
“The refinancing wave provides a strong backdrop for prime RMBS issuance, which remains competitive compared to other sterling instruments,” say JP Morgan analysts. However, uncertainty in the motor finance sector and stricter stamp duty regulations on second homes may dampen auto ABS and BTL RMBS activity.
Australia’s securitisation market continues to impress, with issuance in 2024 exceeding €44bn, breaking records for the second consecutive year. JP Morgan expects issuance to slightly taper to €40bn in 2025, though this remains a robust forecast for a growing market.
“Growth in Australian RMBS and auto ABS, fuelled by rising loan originations and increased participation from global investors, cements its position as a maturing and scalable market,” JP Morgan strategists note. They also highlight the appeal of Australian deals for European investors due to attractive cross-currency adjusted spreads.
While the overall sentiment remains positive, the strategists are mindful of challenges. Global geopolitical tensions, the evolving economic policies of major economies and the performance of collateral are key factors to watch. JP Morgan emphasises that “investor demand for ABS/MBS remains solid, but the market needs to expand its investor base to achieve meaningful long-term growth.”
Still, the floating-rate nature of securitisation products, combined with sticky interest rates in the UK and Australia, is expected to support demand. JP Morgan strategist say: “In a higher-for-longer rate environment, ABS/MBS continues to offer compelling value for investors.”
The European, UK and Australian ABS/MBS markets enter 2025 with strong fundamentals but face potential headwinds. However, as JP Morgan’s strategists aptly summarise: “Progress builds on progress and 2025 is poised to reinforce the securitisation market’s role as a resilient and versatile funding avenue.”
Selvaggia Cataldi
News Analysis
Capital Relief Trades
Green framework
EIF ramping up sustainable SRTs
Following a recent stream of deal announcements, we catch up with Cyril du Boispean, investment manager at the EIF, to reflect on the financial institution’s bustling and sustainable SRT pipeline.
Late last month, the EIB group announced the completion of three synthetic securitisations, with each displaying and incorporating a green framework. The first announcement highlighted a new collaboration between the EIB Group and Norwegian originator DNB, resulting in the latter’s first synthetic securitisation. While the transaction typically highlighted the EIF’s historical and strategic role as a “first mover” in broadening SRT jurisdictions, it also unlocked up to €190m in financing for Nordic businesses. These funds will empower SMEs and mid-caps to accelerate their green and digital transformations, addressing critical sustainability challenges while fostering regional economic growth.
The Luxembourg-based institution then made public Inbank’s inaugural green supranational synthetic SRT and EIB Group’s first synthetic securitisation backed by solar panel loans to private individuals. The transaction will provide capital relief and enable Inbank to provide up to PLN 701m (€163m) in new, more competitively priced loans to private individuals in Poland over the next three years.
Additionally, the EIF partnered with Banco Santander Totta to support energy-efficient housing in Portugal through a synthetic securitisation. The EIB Group guaranteed the upper-mezzanine tranche of the structure for c. €92m. In turn, Santander Totta committed to originate new loans for c. €183m focused on the construction and renovation of buildings that meet high energy-efficiency standards.
Commenting on this recent pipeline, du Boispean stresses its entirely green component. He says: “While having a green or sustainable component is an increasingly growing factor, fully green securitisations are definitely still not the norm.”
He further underlines that the EIF’s green framework focuses on the use of proceeds approach. He says: At the EIB Group, we have an entire team, mostly comprising of engineers, that determine extremely diligently whether a portfolio is entirely green or not.”
Reflecting on these recent environmentally impactful projects, du Boispean particularly highlights the collaboration with Inbank. He notes: “This transaction ticks several important boxes: It is Inbank’s first securitisation; the first entirely green Polish securitisation for the EIF (and in new lending to private individuals); and the first time that the EIF, EIB and InvestEU all collaborate together.”
Staying in the realm of sustainable financings, du Boispean also underlines BBVA and PGGM’s (Verano IV) recent collaboration, with its uniquely structured ESG-linked pricing mechanism: “Usually, the green criteria did not have an impact on pricing, and this is I believe the first time – through the coupon step-down mechanism – that we witness this in a securitisation structure.”
Vincent Nadeau
News Analysis
Capital Relief Trades
SRT: Unlocking opportunities – video
A&O Shearman's Robert Simmons speaks to SCI about the contrasting SRT markets in Europe and North America
Robert Simmons, senior associate at A&O Shearman, speaks to Joe Quiruga about the SRT markets on each side of the Atlantic. Simmons discusses the effect of Basel 3 endgame on Europe and North America, regulatory issues impeding issuance in the European market, the evolving role of lawyers as the SRT space becomes more programmatic, and more.
News Analysis
CMBS
Early signs of European CMBS revival
The European CMBS market is showing signs of rebounding, driven by new asset classes, growing issuance, and ESG focus.
The European CMBS market is gradually showing signs of a resurgence after years of stagnation, with 2024 bringing an uptick in issuance, according to panelists at SCI’s Annual European CRE Finance Seminar in London in late November. CMBS is becoming an increasingly important financing tool across various asset classes, including logistics, data centres and the evolving office space.
Despite economic uncertainties and rising interest rates, experts say European CMBS issuance is recovering from challenging years in 2022 and 2023. "This year has seen around €2.4bn in new issue volume, which is three times what we saw last year,” said Amar Majithia, managing director at Blackstone. “There’s clear investor appetite for CMBS and we’re seeing that across a diversity of asset classes."
Historically smaller than its US counterpart, the European CMBS market is gaining relevance as banks face pressure to optimise capital. Omar el Glaoui, managing director at Citi, said: "In Europe, CMBS could become more relevant as a tool for those banks looking to manage their capital more efficiently, while maintaining direct lending activity to their client base."
The market is also expanding to accommodate new asset classes, notably data centres. These transactions present both opportunities and challenges.
"Data centres are not just typical real estate; they often involve long leases with single tenants or highly granular lease structures that require careful consideration of future cash flows – also considering potential changes to future tenant demand due to technological changes," said Oliver Moldenhauer, vice president and senior credit officer at Moody’s ratings.
Blackstone’s Majithia further emphasised the importance of "strong fundamentals, strong cash flows and the ability to finance at scale" for these assets.
A key challenge lies in the methodological ambiguity around hybrid structures, particularly those blending CMBS and ABS. Moody’s Moldenhauer noted: "In the US, there’s often a strict differentiation between CMBS and ABS. But in Europe, we’re starting to see more hybrid structures and the methodology needs to evolve accordingly. The specific features of the transaction structure will determine which methodology would be applicable."
ESG considerations are also playing an increasing role in CMBS transactions. Investors are factoring in environmental risks, such as carbon transition costs and climate risks, as part of their credit assessments. Moldenhauer stated: "From a risk perspective, we are looking at environmental risks like carbon transition and physical climate risk. These factors could affect the underlying cash flows of properties, especially as they face higher capital expenditures to meet regulatory energy efficiency requirements."
David O’Connor, partner at Mayer Brown, highlighted the improving quality of transactions: "There’s much greater engagement from investors today and a more proactive approach from servicers and sponsors in managing credit positions. The transaction documentation is holding up much better than it did in the earlier stages of CMBS 1.0 and we are seeing much better outcomes for investors as a consequence."
ESG is not only about mitigating risks but also about identifying opportunities. Blackstone’s Majithia highlighted this shift: "We are starting to see more issuances that consider not just the real estate but also the ESG aspects, like energy efficiency and tenant sustainability." This is particularly evident in the office sector, where properties that meet sustainability criteria are expected to outperform. “An example of this is the successful CMBS financing (HERA Financing 2024-1) of the serviced office platform FORA earlier this year,” Majithia added.
As the CMBS market matures, ESG factors will likely further differentiate high-performing assets from those at risk of obsolescence, creating new opportunities for investors targeting sustainable assets.
The outlook for European CMBS is positive, with continued growth in issuance volumes expected in 2025. However, as the market grows, its complexity will increase.
Investors will need to stay attuned to emerging asset classes, structural challenges and the evolving role of ESG. As el Glaoui from Citi summed up: "CMBS is evolving into a much more systematic tool for financing European real estate. We're seeing more asset classes and greater investor engagement, which is a very positive development."
Selvaggia Cataldi
SRT Market Update
Capital Relief Trades
Santander completes UK SRT
SRT market update
Santander has closed another synthetic securitisation from its UK auto loans Motor Securities programme (Motor Securities 2024-1).
In terms of structure, the latest transaction follows previous iterations whereby the issuer placed two classes of credit linked notes: a £27.4m class D tranche (BBB- rating from ARC and KBRA) and a £42m unrated class E tranche.
As of the portfolio pool cut-off date of 31 October 2024, the reference obligations consists of 22,546 conditional sale (CS) agreements, 53,937 secured personal contract purchase agreements (SPCP) and 11,065 unsecured personal contract purchase (UPCP) agreements extended to obligors in the UK by Santander Consumer UK . The outstanding balance of the receivables is £769.2m, of which 32.5% are CS agreements, 54.5% are SPCP agreements and 13.0% are UPCP agreements. The reference obligations are secured by both new (56.2%) and used (43.8%) vehicles.
Vincent Nadeau
SRT Market Update
Capital Relief Trades
Italian CRE
SRT market update
Intesa Sanpaolo has just completed its second transaction (GARC Commercial Real Estate-2) in the commercial real estate (CRE) space, following a pilot deal in 2022.
The SRT is backed by an approximately €1.4bn portfolio of Italian CRE loans, with the Italian issuer placing the junior tranche (high single digit). The sold tranche amortises on a pro-rata basis with triggers to sequential amortisation. Moreover, the portfolio features a replenishment period of two years. The weighted average life (WAL) of the transaction is ca. 3.75 years.
We can additionally reveal that Intesa Sanpaolo executed GARC High Potential-3 in Q3. It is the issuer’s first ISP transaction in the leverage/sponsor-led loans space. In this case, the SRT was backed by a €1.2bn portfolio of Italian corporate and sponsor-led loans. The placed junior tranche (above 10%) amortises on a pro-rata basis with triggers to sequential amortization. The WAL is 3.5 years and the portfolio additionally features a replenishment period of one year.
Vincent Nadeau
News
Asset-Backed Finance
C-PACE partnership inked
Agreement positions Coventry, CGC for future securitisations
Coventry Structured Investments (CSI) recently joined forces with the Coalition for Green Capital (CGC) to drive over US$1bn in public-private investment to finance C-PACE and clean transportation projects. The green bank will provide a US$100m line of credit to Coventry, leveraging EPA-granted capital to support large-scale clean energy initiatives deployment. The facility is designed to be recycled multiple times and has the potential to generate up to US$1bn in total funding over time.
“The key right now is meeting CGC’s initial US$100m commitment. We are thrilled about our current pipeline, and aim to cycle this commitment amount three to five times (or more),” says Rasool Alizadeh, Coventry’s founder and managing principal.
Spanning five years, the committed capital facility will feature a tranche-based structure, with CGC holding the senior position and Coventry assuming the junior tranche. “This facility will initially function as a loan agreement for Coventry, but we’re also positioning CGC as a long-term partner in future securitisations,” notes Alizadeh. “This collaboration is about more than short-term transactions. It's a mutually beneficial strategy for both parties over the long haul.”
Beyond direct funding, the partnership positions CGC as an ally in Coventry’s future securitisation plans. Coventry intends to aggregate assets through the facility while retaining equity and ownership on both sides.
The facility will support C-PACE projects in sectors such as hospitality and multifamily housing, offering property owners long-term, low-cost, non-recourse financing for upgrades involving HVAC systems, lighting, water conservation measures and solar panels. “C-PACE assessments are uniquely suited to address present and future financing challenges in the commercial real estate market, providing a pathway for essential sustainability upgrades,” says Alizadeh.
With the partnership underway, Coventry has set ambitious targets for its C-PACE portfolio, aiming to double assets under management to between US$300m and US$500m by the end of 2025. “Our first year, we closed about approximately US$55m in AUM. This year, we’re on track to more than doubling that growth. It’s a testament to the strategy we’ve built,” says Alizadeh.
As liquidity continues to flow into the sustainable energy financing space, Coventry and CGC are positioning themselves to drive scalable solutions. “Demand is growing, and liquidity is following,” says Alizadeh. “This is just the beginning.”
Marta Canini
News
CLOs
Nuveen raises US$413m for second CLO issuance strategy
New fund provides investors with control equity positions in newly issued Nuveen-managed CLOs
Global asset management firm Nuveen has closed its second CLO issuance strategy at US$413m, with capital from public and private pension plans and family offices, the firm announced on Tuesday.
Nuveen’s CLO issuance strategy will provide investors with controlling equity interests in Nuveen's new issue CLOs, the firm said in a statement. It also offers investors access to quarterly cash flows after the initial investment.
Himani Trivedi, lead portfolio manager and head of structured credit at Nuveen, said: “CLOs are now a mainstream product in the credit space. We are seeing a large new set of investors across the CLO spectrum looking for long-term excess return potential relative to the public credit market, so we expect to see even more activity in 2025.”
As part of the broader Nuveen global fixed income platform, the leveraged finance team monitors the credits within the CLO portfolios. This oversees the full spectrum of credit investment capabilities from senior loans and high yield in the public markets, as well as CLOs and alternatives such as credit arbitrage and distressed.
Nuveen closed its first CLO equity strategy, the Nuveen CLO Issuance Fund, in April 2022, with more than US$375m in committed capital (SCI 6 April 2022).
Nuveen’s CLO management platform currently has assets under management of US$17.8bn.
Camilla Vitanza
News
Investors
Mubadala Capital to acquire minority stake in Silver Rock Financial
Partnership will give Silver Rock Financial access to Mubadala Capital's skills, global network and capital base
Mubadala Capital is to acquire a 42% stake in Silver Rock Financial through cash and stock. The acquirer, the alternative asset management subsidiary of Abu Dhabi sovereign wealth fund Mubadala Investment Company, said this stake could increase to 50% over time, with plans to invest over US$1bn in Silver Rock funds as part of the agreement.
The partnership aims to reinforce Mubadala Capital's presence in the credit sector while providing Silver Rock Financial with access to Mubadala Capital's skills, global network, and capital base, the firm said in a statement.
Silver Rock ceo and cio Carl Meyer, co-founder and co-portfolio manager Michael Haberkorn, and M-Cor Capital – the investment arm of the Milken Family Office – will take equity stakes in the asset management platform, making it the first time Mubadala Capital has welcomed external shareholders into the business.
Oscar Fahlgren, chief investment officer of Mubadala Capital said: "This transaction extends Mubadala Capital's ability to provide differentiated returns and capabilities to source and support a wider range of attractive investment opportunities from around the world.”
Both firms will maintain their independence, with Meyer continuing as ceo and chief legal officer of Silver Rock Financial. The management team at Silver Rock will retain full autonomy over daily operations and will not receive any cash consideration in connection with the transaction, the firm said.
The transaction is expected to close by the second quarter of next year, pending regulatory and legal approvals.
Silver Rock Financial manages US$10bn in assets across structured products including CLO’s and high-yield debt investments.
Camilla Vitanza
Market Moves
Structured Finance
Job swaps weekly: HPS leaders to join BlackRock following acquisition deal
People moves and key promotions in securitisation
This week’s roundup of securitisation job swaps sees HPS Investment Partners’ ceo and governing partners joining BlackRock following the latter’s acquisition of the former. Meanwhile, Pemberton has appointed the former head of the secured funding and ABS team at Alantra as head of origination for its risk sharing strategy, while Encina Lender Finance (ELF) has added two structured credit industry veterans to its investment team.
BlackRock is set to acquire HPS Investment Partners for approximately US$12bn, with 100% of the consideration paid in BlackRock equity. Under the agreement, BlackRock and HPS will form a new private financing solutions business unit led by HPS ceo Scott Kapnick and governing partners Scot French and Michael Patterson.
The combined platform will have broad capabilities across senior and junior credit solutions, asset-based finance, real estate, private placements and CLOs. To develop a full-service financing solution for alternative asset managers, the business will unite direct lending, fund finance and BlackRock’s GP and LP solutions.
The private credit franchise will work side-by-side with BlackRock’s US$3trn public fixed income business to provide both public and private income solutions for clients across their whole portfolios. The firm believes that the future of fixed income lies in building public and private portfolios to optimise liquidity, yield and diversification.
Founded in 2007, HPS’s differentiated origination platform spans non-sponsor and sponsor channels – underpinned by a scaled and flexible capital base – offering companies a wide range of bespoke financing solutions. Kapnick, French and Patterson will also join BlackRock’s global executive committee, with Kapnick additionally serving as an observer to the BlackRock board.
Together with Kapnick, Patterson and French, the firm is led by governing partners Purnima Puri, Faith Rosenfeld, Paul Knollmeyer and Kathy Choi.
Meanwhile, Pemberton has appointed Francesco Dissera as head of origination for its risk sharing strategy (RSS), bringing over 25 years of experience in bank balance sheet optimisation, having established and managed diverse business lines across securitised products, balance sheet advisory and bank asset disposals. He joins Pemberton as md in the RSS team, where his responsibilities include origination, structuring and execution of risk-sharing investments.
Dissera was previously head of the secured funding and ABS team at Alantra, where he advised banks on SRT, asset disposals and other forms of securitisations. He previously held a similar role at Santander CIB for Continental Europe, StormHarbour Securities and was formerly head of European ABS structuring at UBS.
Encina Lender Finance (ELF) has expanded its investment team with the addition of two structured credit industry veterans. The new hires – Ashish Sinha (md - investments) and Avi Azour (principal - investments) – report directly to ELF ceo and cio Geoff Beard and are responsible for sourcing, underwriting and executing senior credit facilities and forward flow purchase programmes for both emerging and established specialty finance companies.
In addition, the company has recruited Dennis Murphy as controller, reporting to ELF cfo and coo Joe Ressa.
Sinha served most recently as a senior investment professional at Elliott Investment Management, where he focused on structured credit and asset-backed investments in the consumer, residential real estate and esoteric asset classes. Previously, he held positions of increasing responsibility at Waterfall Asset Management, Oak Hill Advisors, PIMCO and Goldman Sachs.
Azour worked most recently at Architect Capital as a principal on the investment team, with a primary focus on asset-backed credit investments for consumer specialty finance companies. Previously, he held positions of increasing responsibility at i80 Group and Credit Suisse’s securitised products finance group, where he executed asset-backed transactions in the consumer, aviation leasing, esoteric, residential real estate and commercial real estate asset classes.
Finally, Murphy served most recently as controller at Aduro Advisors, a fund administrator. Previously, he held positions of increasing responsibility at State Street Corporation and PwC, where he focused primarily on fund accounting and external audit work.
Scotiabank has named John Gjata and Tyler Howard as co-heads of its newly-formed structured solutions group, based in Toronto. Gjata was previously md and global head, fixed income derivatives solutions at the firm, which he joined in 2012. Before that, he served as vp, government finance and derivatives at TD Securities.
Howard was formerly md and head, FICC structured notes at Scotiabank. He joined the firm in May 2007 as an associate - credit structuring.
Structured finance attorneys Peter Williams and Elizabeth Walker have joined Reed Smith’s financial industry group, based in the New York office. Williams joins as partner and Walker joins as counsel. Both lawyers were formerly with Linklaters.
Williams’ practice focuses on securitisations, with an emphasis on CLOs. Additionally, he regularly advises clients in connection with US regulatory issues and cash, hybrid and synthetic CDOs, derivatives, asset-repackaging programmes and insurance-linked products.
Walker also focuses her practice on securitisation, with an emphasis on CLOs. She represents arrangers, collateral managers, issuers and investors in connection with CLOs and secured lending facilities.
DLA Piper has appointed Katarzyna Jakubiak as a Warsaw-based partner in its international finance group. Jakubiak leaves her role as partner in Deloitte Legal's banking and finance department after four years with the business. She previously spent three years at White & Case, six years at Clifford Chance and three years at Squire Patton Boggs. Her practice focuses on financing transactions including bilateral and syndicated loans, project finance, structured finance, acquisition finance and corporate finance, as well as margin lending and PTO finance.
John Goldfinch has joined Proskauer as a partner in its global finance practice in London. He brings over 20 years of experience in structured finance, with a focus on advising CLO managers on all aspects of the lifecycle of a CLO issuance, as well as on restructurings and other asset workouts. Goldfinch was previously a partner at Allen & Overy, which he joined from Milbank in February (SCI 23 February).
White & Case has reportedly hired Emma Russell as a fund finance partner. Russell joins from Haynes & Boone, where she worked as head of finance in their London office since 2017. Russell is also a board member of the Fund Finance Association and the Women in Fund Finance Group. The hire highlights the firm’s commitment to expanding its fund finance offering.
Vantage Data Centers has announced key leadership changes to drive its next phase of growth and capital markets initiatives globally. Christophe Strauven, svp, capital markets since 2021, has been named cfo, North America, succeeding Dave Renner, who will retire at year-end after a decade with the firm.
Rich Cosgray will step in as svp, capital markets, bringing over 16 years of experience in digital infrastructure financing. Based in Vantage’s Denver office and reporting to global cfo Sharif Metwalli, Cosgray previously served as md and head of TMT leveraged finance at Truist Securities, where he executed over US$100 billion in debt financing.
Aoiffe McGarry has joined Apollo Capital Solutions’ US syndicate team as an md, supporting the growth of Apollo’s asset-backed and structured debt business. She was previously md, head of global financing and securitisation syndicate US at Citi, having joined the firm’s capital markets team in June 2005.
Belvere Group has recruited a pair of new directors. Josefina Frenk joins Revel Partners with experience in securitisation and the NPL market, with a proven track record in structuring complex transactions across these areas. She was previously head of strategic finance at Lowell, having worked in securitisation at Nordea before that.
Meanwhile, Philip Vasseghi joins Belvere from SEB Corporate Finance. His extensive corporate finance experience and hands-on expertise in the commercial real estate sector will both support the group's broader strategic agenda, as well as bolster Revel Partners’ execution capacity.
And finally, Duncan Marwick has joined Fundbox's capital markets and corporate development team to support the firm's mission of delivering embedded working capital solutions for small and medium-sized businesses. Previously, Marwick served as a senior analyst in capital markets and strategic finance at Prodigy Finance since 2021.
Corinne Smith, Marta Canini, Kenny Wastell
structuredcreditinvestor.com
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