ABS
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Legal concerns
Consumer protection uncertainties highlighted
A recent European Court of Justice (ECJ) ruling on consumer rights in German loan agreements amplifies legal uncertainty regarding information that needs to be included in contracts, Fitch suggests. The implications for Fitch-rated German auto ABS have been limited so far, but the rating agency says it remains important to monitor the impact on borrower behaviour and how far .......
News 13 September 2021
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Chinese reserves
Growth boosts domestic securitisation market
China’s continued economic growth has boosted both securitisation performance and issuance volumes. However, bank asset quality remains at risk because of high economic uncertainties from the lingering pandemic threat and ongoing structural adjustment in the economy. Yet bank asset metrics benefit from continued disposal of bad debts using their substantial loan loss reserves.
According to the latest Moody’s .......
News 10 September 2021
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Back in business
European ABS/MBS market update
The European ABS/MBS primary market is up and running again after the summer lull. This afternoon saw the first widely marketed deal to price since the August hiatus, with more set to follow this week and beyond.
UK non-conforming RMBS Together Asset Backed Securitisation 2021-1ST1 saw its three offered tranches price as follows – £283m class As at .......
News 8 September 2021
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Cyberattack scenarios weighed
Sector developments and company hires
Cyberattack scenarios weighed
Market Moves 8 September 2021
S&P reports that it has seen more credit-relevant cyber events in the last six months than in the previous six years, including the first structured finance transaction reporting an operational disruption following a ransomware attack on the originator and servicer (SCI 28 May). The rating agency says it has explored several hypothetical scenarios to identify areas .......
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Scope concerns
SFA underlines concerns in UK government call for regulation opinion
The SFA has highlighted problems in regulatory jurisdictional scope in its response to Her Majesty’s Treasury’s Call for Evidence on UK securitisation regulations.
Earlier this year, the UK government had issued a call for evidence in connection with securitisation regulation. Under the terms of the consultation, it is seeking views to ensure that it “best delivers” for the UK’s financial sector and .......
News 3 September 2021
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Forward strides
Middle East Islamic finance market looks good into 2022
The Islamic finance Middle Eastern market has achieved notable progress over the last four or five years and sentiment remains very positive, say analysts.
"It's been a strong year so far - we have seen five years of growht in the sukuk markets. On the Islamic banking side, growth has continued to surpass conventional banks. We have seen the industry grow significantly, .......
News Analysis 2 September 2021
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Tight deadline
PRA NPE ABS consultation to 'provide momentum'
The UK PRA’s consultation - which ended earlier this month – regarding the implementation of Basel standards in connection with non-performing loan securitisations has been welcomed by the industry. The authority is seeking to introduce a framework for non-performing exposure ABS, following the implementation last year of a revised securitisation capital framework via the CRR and the publication of .......
News 27 August 2021
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CLO control equity fund closed
Sector developments and company hires
CLO control equity fund closed
Market Moves 26 August 2021
Lakemore Partners has successfully closed Aquatine IV at US$400m, due to strong investor demand. Aquatine IV is Lakemore’s fourth CLO fund within the Aquatine platform, which invests in control equity positions in US CLOs. Investors in the fund comprise a diverse group of institutional investors, representing private banks, fund of funds, insurance companies, family offices .......
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Driving decarbonisation
EUA securitisation platform poised for growth
Tramontana Asset Management recently breached US$5bn in assets through its innovative carbon ABS platform. The programme is poised for further growth, as the rise in EU Allowance (EUA) prices is increasing the need for carbon credit hedging and financing solutions among corporates.
Established in 2019, the Tramontana carbon ABS programme securitises EUAs - each EUA representing an entitlement .......
News 24 August 2021
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Solar LDA partnership inked
Sector developments and company hires
Solar LDA partnership inked
dv01 has partnered with GoodLeap with the aim of further promoting data transparency and accountability within the solar ABS market. Through this partnership, dv01 will serve as loan data agent (LDA) for Carbon Level Mitigation Trust (CLMTE) pass-through certificates.The shelf currently comprises CLMTE 2021-1 and CLMTE 2021-2, with an aggregate notional value of US$53.6m .......
Market Moves 23 August 2021
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APAC ILS issuance on the rise
Sector developments and company hires
APAC ILS issuance on the rise
Continued efforts from Asia Pacific reinsurers to source alternative capital through the ILS market is anticipated, following on the heels of the seven catastrophe bonds that were issued using Singapore-domiciled vehicles through July. Indeed, the first Hong Kong-domiciled catastrophe bond is being prepped.The Singapore cat bonds issued in 2021 comprise: Security First .......
Market Moves 20 August 2021
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Double bind
New SRT tests pose complexities
The European Commission’s new consultation on the Securitisation Regulation (SCI 26 July) for the first time officially offers banks the opportunity to raise questions on the workability of the new significant risk transfer tests included in the EBA’s final report on SRT (SCI 27 November 2020). The tests pose several complexities for banks, due to the design .......
News Analysis 20 August 2021
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Robust recovery
Bumper "summer" for Aussie securitisation
The Australian securitisation market has experienced a deluge of activity in the last few weeks. With a total of A$8bn placed in July, the sector experienced its busiest month since 2007.
Australia's effective management of the coronavirus and macro-policy response generally facilitated a robust economic recovery throughout 2020. “The securitisation market has obviously shown a dramatic recovery since .......
News Analysis 20 August 2021
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Corporate, PF businesses bolstered
Sector developments and company hires
Corporate, PF businesses bolstered
KBRA has enhanced its corporate and project finance businesses by forming new sector teams to focus on the intersection of infrastructure, energy, renewables and middle market lending. The aim of the sector-focused teams is to meet demand for KBRA’s thought leadership across these segments.Andrew Giudici, senior md and global head of corporate, project and .......
Market Moves 18 August 2021
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Financing boost
EGF extended to synthetics
The European Commission has approved the extension of the EIB’s European Guarantee Fund’s support to synthetic securitisations, following an assessment of EU state aid rules. The extension to significant risk transfer deals applies under certain conditions pertaining to SME origination levels and the deployment of released capital.
The envisaged €1.4bn budget is expected to mobilise at least .......
News 18 August 2021
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DSW CMBS exposure gauged
Sector developments and company hires
DSW CMBS exposure gauged
Market Moves 13 August 2021
KBRA Credit Profile (KCP) has published a special report on CMBS exposure to footwear retailer Designer Brands, owner of the Designer Shoe Warehouse (DSW) store chain. The company reported EBITDA of negative US$316m in its fiscal year 2020, as sales plummeted in the wake of the Covid-19 pandemic. The company returned to profitability in 1Q21 after .......
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Simulation analysis
Covid-19 boosts capital ratios
UK and EU bank capital ratios have increased over the past year, despite the effect of the pandemic on profits. Nevertheless, the Covid crisis has exacerbated many of the difficulties related to generating returns, so analysts expect the environment to remain challenging for the European banking sector.
According to KPMG, UK banks saw a 150bp improvement in common .......
News 13 August 2021
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Amortization antics
Vehicle inventory shortage forces ABS issuers to forestall amortization
Ford Motor Credit last week amended the terms of its excess funding account (EFA) to prevent early amortization of ABS notes issued by its master floorplan trust following a similar move by Nissan and market experts say other captive finance vehicles are examining similar options.
Ford upped the percentage of the adjusted investment account that can be deposited into the EFA before .......
News Analysis 12 August 2021
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Downward trend
Corporate defaults continue to drop
Corporate default rates continue to fall across the globe, according to the latest data. However, the declining pace will likely slow by end-December and then stabilise in January to July 2022.
According to the latest Moody’s data, the number of corporate defaults globally remains low this year, reflecting the strong economic recovery and abundant liquidity in capital markets. .......
News 12 August 2021