Capital Relief Trades
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Non-resident Aussie RMBS debuts
Sector developments and company hires
Non-resident Aussie RMBS debuts
Market Moves 8 April 2021
Brighten Home Loan is readying its inaugural RMBS - the A$250m Solaris Trust 2021-1 – which is backed by loans predominantly to non-Australian resident borrowers. S&P notes that the portfolio is not only exposed to macroeconomic events and policies that affect Australia, but also to events and policies that affect the borrowers’ countries of residence. Consequently, .......
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Positive prospects
Margin loan CRTs on the agenda
Credit Suisse is expected to close a capital relief trade referencing Asian margin loans this quarter (SCI 15 March), with further such transactions anticipated amid rising current and future IPO issuance. Although senior management and regulators remain to be convinced, synthetic securitisations appear firmly on the agenda as a tool for managing the capital impact of an increase .......
News Analysis 8 April 2021
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Show me the money
Debut US regional bank CRT yields too thin for traditional buyers
Traditional capital relief trade buyers would not have been attracted to the recent Texas Capital Bank deal, as the yield was insufficiently alluring, say investors.
“Libor plus 400bp is too low; we’re looking at an absolute return of 8%-12%. We’d have to use leverage to get it up to those levels and we don’t do that. This .......
News Analysis 29 March 2021
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Corporate failures
Default study sheds light on governance
Governance failures have been shown to be a contributing factor in a large percentage of corporate defaults, according to a new study. Nevertheless, economic downturns remain the driving factor for most defaults.
According to a new Fitch study, economic downturns are the driving factor for most corporate defaults. However, in the observed period, weaknesses in governance were also .......
News 25 March 2021
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The Collins catalyst
Dodd-Frank amendment could provide tipping point for US CRTs
The take-off of the US capital relief trades market has been predicted for several years. This CRT Premium Content article explores whether the increasingly onerous impact of the Collins Amendment could provide the tipping point.
This amendment to the 2010 Dodd-Frank Act, named after Senator Susan Collins of Maine, requires US banks that are entitled to use their own ......
News Analysis 22 March 2021Premium Content
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Record breakers?
Chart-topping CRT issuance volumes anticipated
The capital relief trades market is set to break issuance records in 2021 after a challenging 2020, as banks seek ways to improve their return on equity and following pent-up issuance from last year. In this CRT Premium Content article, we examine the conditions that the coronavirus crisis has laid out for a surge in risk transfer volumes this ......
News Analysis 19 March 2021Premium Content
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Legislative hoops
Multiple layers of regulatory assent hinders US CRT development
Texas Capital Bank confirmed last week that it sought approval from three different US regulators before selling its debut capital relief trade (SCI 12 March). For many banks, this process represents a deterrent to issuance.
The OCC, the US Fed and the FDIC all had to give the thumbs up to TCDI before it felt able to .......
News Analysis 17 March 2021
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'Unprecedented' Moroccan CRT closed
Sector developments and company hires
‘Unprecedented’ Moroccan CRT closed
Market Moves 16 March 2021
Moroccan fertiliser giant OCP Group has subscribed to the notes issued by the first synthetic securitisation in Morocco. The transaction involved the establishment of a collective securitisation vehicle dubbed Fonds Damane Tamayouz, which has been structured to facilitate access to credit for the suppliers that make up OCP's industrial ecosystem.
Clifford Chance, which advised on the deal, .......
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Texas two-step
TCBI's debut is the curtain raiser for a new CRT strategy
Texas Capital Bank’s (TCBI) debut in the CRT market - making it the first US regional bank to successfully execute such a deal (SCI 11 March) - is not a none-off but the beginning of a long-term strategy, Madison Simm, evp, business optimisation in Dallas, told SCI yesterday (11 March).
The deal carries a three-year term, but .......
News Analysis 12 March 2021
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Texas blazes the trail
The first CRT deal from a US regional fires the starting gun
Texas Capital Bank has become the first US regional bank to issue a credit risk transfer deal, breaking the ice in what is expected to be an increasingly active area of the US CRT market.
A $275m CLN references a $2.2bn mortgage loan exposure and the deal was oversubscribed, says the bank. It closed on March 9.
News Analysis 11 March 2021