Contents

CLOs

CLO double-Bs trade heavily as CIFC equity deal stands out

Poh-Heng Tan from CLO Research Group highlights BWIC activity on selected discounted CLO double-Bs and noteworthy equity trades

Last week saw active double-B tranche trading, with approximately 68 CLO double-B bonds totalling around US$220 million in notional listed on BWIC, of which 79% traded.

Among US CLO deals with low MVOC metrics (101h to 102h) that have exited their reinvestment periods, cover DMs ranged from 740 to 790. Of the five deals in this cohort, only MCLO 2019-1A D has a positive equity NAV—though it also features a longer WAL.

Although today’s strong loan market conditions offer a favourable window to redeem seasoned deals, those with negative equity NAVs remain uncallable.

For deals that have exited their reinvestment periods and have better MVOC metrics (ranging from 103h to 104h), cover DMs ranged between 610 and 680.

The next table highlights two distressed bonds. VENTR 2019-36A E traded near its estimated liquidation value, while SNDPT 2015-1RA E covered well below, likely due to its odd lot size.

The following table shows three bonds with MVOC metrics in the 98h to 100h range. Their discount margins ranged from 915 to 1,362 DM.

Turning to CLO equity trades, one deal stood out. A majority stake with a notional of US$30.609 million in CIFC 2014-5A SUB traded at a cover bid of 42h.

The 2014 vintage is among the most challenging in the 2.0 US CLO market, with many redeemed deals posting negative IRRs. Even so, CIFC 2014-5A SUB has delivered strong returns for primary investors.

Assuming a primary issue price of US$95, original equity investors would have achieved an IRR of 14.2%. The deal has paid an average annual distribution of 13.4% over 10.5 years and still has a long runway, with its reinvestment period ending in July 2029. First issued in 2014, it was refinanced in October 2016, then reset in September 2018 and again in July 2024.

ANCHC 2019-13A SUB, issued in 2019, performed strongly with a primary equity IRR of 14.2%, supported by solid annual distributions since inception.

OHALF 2016-1A SUB, from the 2016 vintage, received a solid cover of 61.1. Combined with its strong annual distributions, this translated into a primary equity IRR of 15.4%.

Source: SCI, CLO Research

ABS

Spread pattern shifts studied

SCI data sheds light on international ABS spread movements and risk appetite before and after Liberation Day

The European and Australian ABS/MBS primary markets have seen notable shifts in volumes and pre-pricing spread behaviour, as investors momentarily pulled back from the sector, following President Trump’s 'Liberation Day' on 2 April. These changes have been driven by evolving perceptions of credit risk, trade policy and tariff developments, regulatory adjustments and anticipated central bank rate cuts. However, SCI’s primary issuance data demonstrates not only a cautious recovery, but also indicates the full extent of pricing power in spreads between issuer and investor.

A sample of the most actively issued ABS sub-asset classes shows how spreads evolved through 2025 by analysing the difference between initial price talk (IPT) and final spread. When this gap is small, it indicates stable demand and tighter market consensus, assuming asset quality remains the same. A positive spread difference implies strong demand and tighter final pricing for the issuer, while a negative difference indicates weaker demand, a higher cost of capital and greater investor pushback.

Source: SCI's International ABS Deal Tracker

This is captured in the boxplots. As expected, prime RMBS appears most stable, while CMBS pricing shows much higher dispersion.

CMBS has been particularly sensitive to macro uncertainty and trade-linked slowdown in commercial real estate activity. Weakening fundamentals in the office and retail sectors, along with refinancing risks in a higher-rate environment, have amplified spread volatility.

Consumer ABS remains wide, due to rising delinquencies and household leverage, while auto ABS sits between RMBS and CMBS in terms of stability - reflecting its sensitivity to both retail credit and macro trends, such as supply chains.

Source: SCI's International ABS Deal Tracker

The Australian ABS market shows similar trends, despite a smaller sample size. Prime RMBS pricing was tightly clustered, with just an 11bp range between IPT and final spreads.

However, consumer and credit card ABS continues to show wider spread differences, likely due to household debt levels, rate sensitivity and the sector’s exposure to domestic demand risk.

Source: SCI's International ABS Deal Tracker

The most telling trend comes from comparing senior and mezzanine tranches. The scatter plot shows the tighter, more stable dispersion of senior tranches around zero both before and after Liberation Day in contrast to the mezzanine tranches.

Despite this, post-2 April saw more of a dispersion in spreads from IPT to final coupon, with the lowest point for seniors – the APOLLO Series 2018-1 refinancing - occurring just after. The variance of this dispersion before Liberation Day was 16.85. However, after Liberation Day, this increased to 48.97 - marking a 190.62% increase.

This trend is more pronounced for mezzanine tranches, whereby spreads post-Liberation Day often turned negative. Tariff uncertainty and reduced investor risk appetite likely caused this shift, as mezzanine tranches became harder to place.

Similarly to the senior tranches, the variance of this dispersion before Liberation Day was 418.23. However, after Liberation Day, this increased to 2525.31 - leading to an even higher 503.81% increase.

Source: SCI's International ABS Deal Tracker

From a liquidity perspective, average issuance volumes followed expected seasonal patterns, with a subdued January following the Christmas period and strong issuance in February and March. However, in April, the average deal size fell to €562m, accompanied by a lower average coverage ratio of 2.6x, reflecting weaker demand. While issuance has since recovered, it remains below the confidence levels seen in early Q1, as seen in the spread behaviour captured in the scatter plot.

With the second half of the year underway, the data points to a market still recalibrating after the shock of early April. Investor caution has become more pronounced, particularly in mezzanine tranches, where spread volatility reflects increased risk aversion. Meanwhile, senior tranches have remained relatively stable, reinforcing the market’s preference for higher-quality paper and liquidity.

Matthew Manders

Capital Relief Trades

UK issuer targets Q3 and Q4

SRT market update

Asset-Backed Finance

From gaps to growth: ABF's answer to SME lending's so-called valley of death

Avellinia Capital co-founders and managing partners, Julian Schickel and Matthias Dux, answer SCI's questions

Q: Avellinia Capital (AvCap) and the British Business Bank (BBB) recently announced a new partnership to provide capital solutions for fintech lenders. Can you walk us through how the partnership came about and how it aligns with your broader capital deployment strategy? 

Julian Schickel: We closed the first transaction with BBB some time ago and have since upsized it several times. There’s still some work to be done on that transaction, and we’re also exploring new opportunities with the British Business Bank. 

In essence, the partnership is intended to be a long-term collaboration. It took some time to get it in place, but we’re really happy with where we are now. They’ve been an extremely supportive partner thus far, and you can tell their team is focused on doing the right things to make these kinds of partnerships happen. 

When it comes to future endeavours, we at Avellinia Capital have historically been active across Europe – with about 50% of our portfolio in the UK and the rest mainly in north-western Europe. I think that’s also a reflection of the market: the UK is ahead of the continent when it comes to fintech and alternative lending. So we’ve grown in line with market development. 

Matthias Dux: We’ve also been in touch with comparable organisations across Europe, and I have to say, the BBB has been a lot more proactive and flexible. While I’m not a fan of Brexit, this is one area where the UK is in a better spot than many of its European peers. 

The BBB is politically mandated to support SME funding, and while the process has rightly been thorough, we’re now at the point of getting capital out the door to UK SMEs via the lenders we fund in partnership. 

Q: What does your current deal flow look like in the UK, and how scalable is the BBB platform? 

JS: We typically see around 250 to 300 potential opportunities a year, of which about half are in the UK. These include fintech lenders, invoice finance and more traditional factoring models that use technology. 

The separation between fintech and alternative lending is becoming increasingly blurred –obviously, while traditional lenders use technology, fintechs have to focus on proper credit underwriting as well. Our constraint as an investment manager has never been about pipeline but more to do with capital availability – which this partnership makes at least one step towards addressing.

The BBB can match private investor capital, allowing us to scale up more significantly. We typically close between five and 10 of the 250 transactions we look at per year, usually on the larger side. There’s nothing we can disclose yet, but we’re hoping to complete one or two additional transactions with the BBB this year. 

Q: Is this a forward flow programme, or structured differently? 

JS: What we do is ABF, and while we could theoretically do forward flow, we rarely do. Our ABF facilities are scalable but can start small. That’s where players like us are different from the likes of Carlyle or KKR, who want £50m-plus tickets. There’s a whole space below that, which is where we operate. 

MD: So technically, it’s not a forward flow. We provide a facility where we deliver senior funding, and the lender takes the first-loss tranche. It’s a borrowing base-style with monthly testing. We could do forward flows under other structures, but here we expect lenders to provide a thick first-loss piece. 

JS: Put more simply, it’s about alignment of interest. The originator needs to be aligned with their underwriting. If something goes wrong, they take the first hit. That ensures focus on loan quality. 

As the programme scales, we can go from senior to mezzanine or subordinated positions. We’re always secured, always backed by granular pools of revolving assets. We also assess the quality of the team, their underwriting and servicing capabilities, but the primary security is in the assets. 

This model serves the ‘not-quite-day-one’ lenders – those in the £5m to £50m range who’ve outgrown equity-funded lending but aren’t yet bankable. That’s a niche that’s still underserved. 

MD: Some call it the ‘valley of death’ in debt funding. 

Q: You mentioned Apollo, KKR and Carlyle. How do you view the role of larger private credit players in this space? 

JS: For many of the large funds, it’s not efficient to do small deals. They require the same work and complexity as a £100m or £500m transaction, so you need to be set up to do it efficiently – and we are. And yields are higher, allowing us to offer compelling returns to our fund investors and co-investors. 

We’re also in regular contact with several of those firms. Sometimes we act as an extended workbench – we bring them deals when they scale up or work in partnership where they re-underwrite what we originate. 

MD: Some of the large funds have financed fintech lenders directly in the past, but it’s a lot of work. Partnering with AvCap gives them access to more opportunities with strong structuring, execution, and monitoring capabilities in place. 

Q: Do you think the market’s understanding of ABF has changed over the last few years? 

MD: Absolutely. A few years ago, if you said ‘private debt’ to an LP, they assumed you meant direct lending. We’d have to explain that ABF is something different – diversified portfolios, better risk-return. And they’d say: “Sounds complex, maybe later.” 

That’s changed. Now people take time to understand the mechanics, and they realise the complexity is there to enhance security. It’s become clear to them that ABF is structurally attractive. 

JS: It’s funny because ABF is probably the oldest form of lending. Farmers in ancient Mesopotamia were financing the next crop using their goods as collateral. 

For us, it’s good that there’s more attention and people spending time to better understand the sector better. I’d go one step further– and say some of our larger peers like the Apollos, KKRs and Carlyles are doing the education work for us. Five years ago, when we were doing roadshows, people sometimes had no idea what we were talking about. 

There’s always a risk of things being over-hyped, but this isn’t just a fad. It’s an efficient, diversified way to lend and finance portfolios of assets. 

Q: What’s the next frontier? Are there emerging asset classes that excite you? 

MD: Securitisation represents 50% of US GDP, but only 7% in Europe. You can pin it on the US being more developed in financial services engineering etcetera, but this wasn’t always the case. The financial crisis took a big toll. For a while, the market had to avoid using three-letter acronyms to avoid smelling of subprime mortgages, but the perception has changed since then. The conversation and the mood is changing again. 

There’s also a big opportunity in the shift towards rental, subscription and circular models. We’ve funded companies like Raylo in the UK, which rents out iPhones and laptops. There are long-term car rental and caravan rental platforms in our portfolio; we are looking at e-bike subscriptions and things like salary-sacrifice bike schemes in Germany. All these new assets need financing. 

So yes, the big players are coming in, but that’s a good thing. It brings visibility. And often, they rely on partners like AvCap to scale these opportunities to the size they want. 

JS: Even if Europe doubles or triples from that 7%, we’re still far behind. So, this is just the beginning. 

Claudia Lewis

Asset-Backed Finance

Opening doors at Akin Gump

Sarah Milam speaks to SCI about joining Akin Gump's capital solutions team

Sarah Milam recently joined Akin Gump Strauss Hauer & Feld as a partner in the firm's New York office, focusing on ABF, securitisation and structured finance. She joins from Dechert, where she spent seven years as a partner. Speaking with SCI, Milam discusses her move to Akin, the firm's securitisation strategies and current trends in the ABF market. 

Q: It’s been a few weeks since you joined Akin Gump. How are you settling in? 

Sarah Milam: The reception from clients, both existing firm clients and those that I've worked with in the past, has been really positive. People are excited about the whole capital solutions practice that Akin has been at the forefront of while also adding the asset-based finance and structured finance capacity to that programme. 

Q: What made you choose Akin over other firms for your ABF practice? How do you see the company standing out? 

SM: With the growth of asset-based finance and structured finance generally, having every discipline available to clients is important – fund formation all the way to workouts and restructuring and special situations. When I spoke with Akin, I was impressed with how they put together this capital solutions platform and how thoughtful the firm has been about what services clients are looking for.  

ABF is such a critical part of that, particularly right now. The practices involved are stellar – corporate M&A, funds, restructuring – every piece of it is really great. I think clients really look to Akin to have that full-service relationship and to work on some of their more challenging work. 

Q: Where are you seeing the biggest opportunities in ABF right now?  

SM: The current trend is just the continued emphasis on ABF, particularly in uncertain and volatile times where we don't know exactly what's going on. Assets provide a good source of return for investors because they're isolated from operational risk, because you pick up reps around them, because they're modelled on the tenor of the underlying assets. This industry has obviously been around forever, but it's really changed and evolved and become so much more prevalent with the evolution of private capital and private credit, and the deleveraging of banks following the global financial crisis. 

Q: And what about challenges? 

SM: The challenges that people face are on the sourcing side and execution. We're going to continue to see people look at origination platforms, whether it's in-house or joint venture, just different ways to get the assets. As far as asset classes themselves, they run the gamut of everything, because people are looking for opportunities and there are pockets within every class, whether it's consumer or commercial or esoteric. And there are also high expectations on the CLO market to continue to be strong. 

The general state of the market is one of waiting to see what will come next, but the great thing about ABF is that it's not in a box – there are a lot of different things that can come next and a lot of flexibility and nimbleness. In this particular area, there's a lot of capital that's available, so I don't see it slowing down. 

Q: You work with non-traditional assets like royalties. What are some of the more unusual things clients want to securitise? 

SM: It's a continued question of: What can we securitise? Obviously, the music royalty market is really strong and has sparked interest in all sorts of other types of IP transactions. Pharmaceutical is strong – that's been around for a while, but I hear probably more about it than I used to. I hear all kinds of ideas for different asset classes. 

What's interesting to me, considering I grew up in ABS and was around before this transition – deals that we couldn't have done in the traditional market, now we can because private credit can do a lot more and can finance assets that would never be able to be financed by banks. That's opened the door to so many different types of asset classes and really anything that you could dream up. 

Q: Any final thoughts on your new role? 

SM: I'm really excited to be here. This is a platform with a lot of momentum, a firm with a lot of momentum, and one that's really focused on executing on this strategy. 

Marina Torres

Structured Finance

Job swaps weekly: Ares snaps up new partner from AIMCo

People moves and key promotions in securitisation

This week’s roundup of securitisation job swaps sees Ares Management Corporation naming a new partner and co-head of its global capital solutions team. Elsewhere, Colliers’ investment management division Harrison Street Asset Management has acquired RoundShield Partners, while BBVA has hired a Madrid-based securitisation industry veteran to lead its capital and active balance sheet management team. 

Ares Management Corporation has appointed Sarah Cole as partner and co-head of the Ares Global Capital Solutions team, alongside current partner and group co-head Roshan Chagan. In this newly created role, Cole will be responsible for enhancing Ares’ strategic relationships with the banking, insurance and broader capital markets community.

She will partner with senior leaders across Ares to deliver its broad underwriting and financing capability to source new investment opportunities. Together, Cole and Chagan will further centralise Ares’ capital market activities to optimise the overall experience and strategic value for its counterparty partners.

Cole joins Ares from the Alberta Investment Management Corporation (AIMCo), where she was an md overseeing firmwide strategic relationships. During her time at AIMCo, she was responsible for advancing the firm’s strategic co-investment efforts and scaling private credit deployment.

Prior to her time at AIMCo, she was an md in the structured credit group at Barclays, where she led sourcing efforts for ABL and other credit financing opportunities. Earlier in her career, Cole was also a member of the high yield team at Goldman Sachs and served in other banking roles.

Harrison Street Asset Management, the investment management division of Colliers, has acquired a majority stake in European credit investment manager RoundShield Partners. With US$5.4bn in assets under management, RoundShield specialises in asset-backed capital solutions across real estate, infrastructure and financial assets through opportunistic credit and structured equity strategies. 

Since its founding in 2013, the firm has consistently delivered market-leading risk-adjusted returns to a diverse global investor base, including pensions, endowments, foundations, insurers and family offices.

Under the terms of the transaction, Harrison Street has acquired a 60% equity interest in RoundShield from its management team and a third-party financial investor. The remaining ownership will be retained by RoundShield’s senior management team, who will continue to lead the business.

BBVA has recruited securitisation industry veteran, Julio Cesar Rosas Bernal, to head up its capital and active balance sheet management team in Madrid. Bernal joins the bank after a short stint at Novicap where he served as its head of capital market and strategy team, and in his new role will work across both cash and synthetic transactions. With more than 15 years of industry experience, Bernal has held senior positions at Crealsa, EY and notably as the head of origination and structuring at Titulización de Activos.

Hughes Hubbard & Reed has appointed Andrés Berry as a partner in its banking & financial services practice, based in New York. Berry brings experience in acquisition finance, fund finance and asset-based finance transactions, with a particular focus on Latin America and the Caribbean. He comes to Hughes Hubbard from Clifford Chance, where he was counsel, having joined the firm in August 2017 as an associate from Pillsbury Winthrop Shaw Pittman.

And finally, Proskauer Rose has hired Casey Miller to join its structured credit team as senior counsel in Washington D.C as it grows its global finance group. Miller takes on the new role after serving as an associate at Paul Hastings and most recently Dechert, and will support the firm’s expansion into CLOs and other asset classes.

Corinne Smith, Claudia Lewis