ABS
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Social mobility
'Cultural progression' puts social bonds in focus
Securitisations designated as social bonds are gaining traction, with the underlying asset classes expected to broaden. Indeed, at present, it is easier to define lending in a socially responsible way than defining it as ‘green’.
Edward Baker, capital markets director at Prodigy Finance, attests to the reasons this may be. “I think it perhaps chimes with the broader ethical and .......
News Analysis 15 February 2022
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HKMC inks infrastructure MoUs
Sector developments and company hires
HKMC inks infrastructure MoUs
Market Moves 11 February 2022
The Hong Kong Mortgage Corporation (HKMC) has signed a memorandum of understanding on an infrastructure loans framework with 14 partner banks. The MoUs set out the principal terms for potential infrastructure loan cooperation between the HKMC and the partner banks on both primary participation and secondary sale bases, including the loan selection criteria, mode of participation .......
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Increasing allocation
Innovation, transparency attracting institutional investors
The majority of institutional investors polled in a recent Aeon Investments survey have increased their allocation to structured credit investments across different asset classes over the past 18 months. When asked why there is growing interest in structured credit investment vehicles, the top three reasons were given as greater innovation in the sector, an improving regulatory environment and greater .......
News Analysis 11 February 2022
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Agencies win 'valid-when-made' cases
Sector developments and company hires
Agencies win ‘valid-when-made’ cases
The US OCC and FDIC yesterday received favourable court rulings in cases challenging their ‘valid-when-made’ rules. In each case, the plaintiffs were three states – California, Illinois and New York – challenging the validity of the rulemakings.The states' attorney generals alleged that both federal agencies violated the Administrative Procedure Act. In particular, the plaintiffs .......
Market Moves 9 February 2022
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Wider spreads coming
European ABS/MBS market update
The hawkish pivot of the ECB, combined with lingering inflation-driven volatility conspired to drive spreads wider and dampen activity in the European ABS/MBS primary market over the past week. The two transactions in the near-term visible pipeline will have to scramble to price against the currently strained market backdrop.
Finnish auto ABS Tommi 2 (LT Autorahoitus) is due .......
News 7 February 2022
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CIP, Whitecroft partner for infrastructure SRT
Sector developments and company hires
Copenhagen Infrastructure Partners (CIP) is marketing its inaugural debt fund – the CI Green Credit Fund I (CI GCF I) – having secured €320m in seed capital. Targeting a size of €1bn, the fund will provide private project finance debt with subordinated risk characteristics supporting renewable energy projects globally.
Focus will be on green- and brownfield projects in offshore wind, .......
Market Moves 7 February 2022
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Risk transfer boost
Barclays tops annual SRT issuance
Barclays has finalized twelve significant risk transfer transactions from the Colonnade programme last year which all total US$1.6bn in equity tranche notional. The number of deals renders Barclays the most active SRT originator of 2021 as capital relief trades continue their post-Covid surge.
According to Frank Benhamou, head of funding and capital solutions at Barclays, ‘’SRT transactions help us improve .......
News Analysis 4 February 2022
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Big business
Strategic shift favours alternative credit M&A activity
The alternative credit industry might be at an inflection point in its development, with a decisive change anticipated in M&A activity in terms of the dominant acquirer from a financial to strategic buyer. Such a transition would inevitably benefit leading alternative credit managers.
“After five years of real and incredible growth in alternative credit acquisitions, we have witnessed .......
News Analysis 3 February 2022
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Electric avenue
Electric cars aren't as green as they seem
“Just because you have an electric car it doesn’t make you green,” says the head of liquid assets investment at a large public sector borrower in North America.
He manages a $45bn portfolio of which is between $5bn-10bn is devoted to AAA-rated structured finance products, and he was talking about the difficulty of scoring these deals according to ESG criteria.
While plain vanilla .......
News Analysis 28 January 2022
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Trigger concerns
EBA complicates CRT thickness requirements
The EBA’s consultation paper on regulatory technical standards (RTS) regarding the specification of performance-related triggers for STS synthetic securitisations has largely been welcomed by originators (SCI 20 December 2021). However, one backward-looking trigger pertaining to the thickness of the protected tranche has raised eyebrows.
The consultation stipulates backward- and forward-looking performance triggers that switch a synthetic .......
News Analysis 28 January 2022
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Impact investor acquired
Sector developments and company hires
M&G is set to acquire a majority stake in impact investor responsAbility Investments. Headquartered in Zurich, responsAbility has invested more than US$11bn in private assets across emerging markets since it was founded in 2003 and currently has approximately US$3.7bn of assets under management (as at year-end 2021).
The acquisition is in line with M&G’s strategy to grow its sustainable investment .......
Market Moves 28 January 2022
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Risk limits
US corporate SRT issuance to remain constrained
Issuance of capital relief trades referencing US corporate loans is likely to remain constrained, even though a small pick-up in volume has occurred since 2020 with transactions issued by JPMorgan, Goldman Sachs and HSBC USA. Such deals are expected to be driven less by capital relief requirements and more by considerations pertaining to limit relief, profitability and balance sheet growth.
News Analysis 28 January 2022
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Inflection Point?
European ABS/MBS market update
The European ABS/MBS primary market has been hit by macro volatility this week. While the previous week saw healthy investor demand and firm pricing (SCI 21 January), the current tense backdrop of central banks unwinding and major geopolitical tensions, appears to have affected spreads.
“The primary market has generally been very volatile this week,” notes one ABS/MBS .......
News 28 January 2022
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SME uplift
Further details on Banco BPM SRT revealed
Further details have emerged in connection with Banco BPM’s significant risk transfer trade with the EIB Group (SCI 22 January). The €91m first loss guarantee references a static €1.57bn portfolio of Italian SME loans and will enable Banco BPM to channel €1bn into the Italian economy.
The guarantee supports the working capital requirements and investments of Italian .......
News 28 January 2022
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New hires
Sector developments and company hires
Greystone has announced several new senior hires as it continues to grow its CMBS platform. Jared Noordyk and Natalie Grainger will be joining the firm as head of securitisation and cco, respectively, and will report to head of CMBS, Rich Highfield Noordyk will join the firm from SitusAMC, where he served in a senior role for its CRE Advisory group working .......
Market Moves 26 January 2022
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Remarkable restructuring
Re-tranched NPL ABS set to benefit from GACS
Intesa Sanpaolo last month completed the first restructuring of an Italian non-performing loan securitisation seeking to benefit from the GACS guarantee. Dubbed Penelope SPV, the deal also marks another first for Italian NPL transactions as, at the time of the assignment of ratings, some properties had already been acquired by the associated ReoCo.
“Penelope SPV is unusual because .......
News Analysis 25 January 2022