Capital Relief Trades
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Risk transfer round-up - 10 May
CRT sector developments and deal news
Credit Suisse’s Magnolia Finance V 2015-3 has been de-listed from the Cayman Islands stock exchange following full redemption of the notes. The US$75.23m eight-year CLN was completed in 2015 and references US and Swiss corporate loans (see SCI’s capital relief trades database).
According to SCI’s capital relief trades database, the last Magnolia V transaction was inked in .......
News 10 May 2019
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Risk transfer opportunity?
Failed merger talks raise CRT prospects
Deutsche Bank’s capital relief trade (CRT) issuance could witness a boost following the failed merger talks with Commerzbank, given the challenge of generating capital organically. However, future issuance will depend on whether the bank can meet cost and revenue targets.
The bank’s 1Q19 results show a healthy CET1 ratio equal to 13.7% but it’s likely to face headwinds .......
News Analysis 9 May 2019
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Challenges persist
Structuring issues put shipping SRTs on hold
Capital relief trades referencing shipping loans have long been discussed and planned by a small number of issuers and arrangers. However, low performing portfolios and structural complexities pertaining to mixed portfolios that include shipping loans pose challenges that are constraining volumes.
Nord LB, for one, has allegedly attempted a shipping SRT that was set to close in .......
News Analysis 3 May 2019
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Risk transfer round-up - 3 May
CRT sector developments and deal news
Santander is rumoured to be readying an SME transaction from its Magdalena programme for 2Q19.The transaction would be the issuer’s third-ever Magdalena deal.
The second Magdalena deal, dubbed FT Pymes Magdalena, was completed last August. The €166.3m CLN referenced a €2.5bn Spanish SME portfolio and paid 8.85% (see SCI’s capital relief trades database).
....... News 3 May 2019
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Risk transfer round-up - 26 April
CRT sector developments and deal news
The second quarter of this year is expected to be more active in terms of capital relief trade issuance, compared to previous years, as banks adapt to ESMA’s securitisation disclosure requirements and many uncompleted deals slated for 4Q18 move to this year. Among these transactions are said to be four SME and two leveraged loan risk transfer trades targeted .......
News 26 April 2019
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Rating agency names managing director
Sector developments and company hires
EMEA
Scope has named Guillaume Jolivet as md. He joins the firm’s management board, alongside Torsten Hinrichs, coo of the Scope Group. With more than 18 years of experience in credit analysis and ratings, Jolivet joined Scope in 2013 and held several senior positions at Moody’s and UBS before that.New York University’s Stern School of Business finance professor .......
Market Moves 25 April 2019
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CLO manager denied incentive fee
Sector developments and company hires
Incentive fee ruling
Market Moves 18 April 2019
The High Court in London has ruled that Barings (UK), as collateral manager, was not entitled to an incentive fee at the expense of junior bondholders following the optional redemption of the Duchess VI CLO. Part 8 proceedings were brought by Deutsche Trustee Company, to determine the correct interpretation of the bond documentation in which Barings (UK) .......
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Risk transfer round-up - 18 April
CRT sector developments and deal news
Credit Suisse is believed to be readying a corporate capital relief trade from its Elvetia programme that is expected to close in June. The Swiss lender’s previous Elvetia trade closed in November last year (SCI 30 November 2018).
Another risk transfer transaction that is reportedly in the pipeline for this year is a commercial real estate deal from Raiffeisen. ......
News 18 April 2019Premium Content
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BWIC boom
Quarterly SCI data update
The first quarter of a year is usually quieter than the previous quarter and, for the most part, 1Q19 saw reduced activity over 4Q18 (SCI 24 January 2019). The notable exception was CLO secondary markets, where BWIC volumes boomed for the second quarter in a row, according to SCI data.
....... News Analysis 11 April 2019
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Risk transfer round-up - 3 April
CRT sector developments and deal news
Deutsche Bank has completed its first capital relief trade for the year. Dubbed CRAFT 2019-1, the US$382.5m nine-year CLN pays a coupon of 10.3%. The transaction features a seven-year WAL and a two-year non-call period.
The German lender’s last CRAFT transaction was inked in June 2018. Dubbed CRAFT 2018-2, the US$210m CLN paid Libor plus 10% (see SCI’s capital relief ......
News 3 April 2019Premium Content
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CRT credit event
Company hires and sector developments
CRT credit event
HSBC’s Metrix series 2015-1 CLN has suffered another credit event. The issuer received a credit event notice confirming that a bankruptcy credit event occurred on 15 March with respect to a reference entity that is believed to be Interserve, which was recently sold out of administration after shareholders rejected a rescue deal for the company. .......
Market Moves 27 March 2019
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Goals aligned
Insurers target dual-tranche CRTs
Insurance firms are targeting mezzanine tranches in dual-tranche capital relief trades as banks warm up to unfunded insurance structures, given the lower cost of protection and the relative safety of the mezzanine tranches in these deals (SCI 10 January). Indeed, benchmark unfunded trades have already been completed, raising the prospects of further credit insurance deals going forward.
"The second-loss ......
News Analysis 22 March 2019Premium Content
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Latest podcast now available
CRT themes and a Dutch RMBS first discussed
In this month's podcast, we explore some interesting themes within the CRT market: namely, eligibility criteria and replenishment conditions, as well as control rights within transactions. Additionally, we take a closer look at Domivest's debut securitisation of buy-to-let loans - a first for the Dutch market.
Click here to listen to the whole thing on our site. Alternatively, you .......
News 15 March 2019
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Control rights
Synthetic CRE investors gain comfort
Investors in risk transfer transactions referencing commercial real estate loans have become more comfortable with fewer control rights, following the inclusion of replenishment in the second wave of CRE capital relief trades last year. However, demand for greater control over such portfolios may arise if banks bring lumpier assets to market.
According to David Wainer, partner at Allen & Overy: ......
News Analysis 8 March 2019Premium Content
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Creative approach
Definition of CRT criteria evolving
As the drivers for banks to pursue risk transfer transactions have broadened over the last few years, lending criteria for the underlying assets have in turn become increasingly complex. Consequently, for structured or esoteric portfolios, capital relief trade issuers and investors are adopting a more creative approach to defining eligibility criteria and replenishment conditions.
A standard capital relief ......
News Analysis 7 March 2019Premium Content
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Deleveraging deal
Bari SRT performance consistent with expectations
Scope has determined that the performance of Banca Popolare di Bari’s last significant risk transfer transaction with the EIF (SCI 17 August 2018) has remained within its expectations. The sequential deleveraging of the transaction offsets the loss potential from a growing delinquency pipeline for the rated tranche, according to the agency.
The financial guarantee provided by the EIF to .......
News 6 March 2019
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Line-up finalised
CRT event to include two workshops
The line-up for SCI’s 3rd Annual Risk Transfer & Synthetics Seminar on 12 March has been finalised. Hosted by Clifford Chance at 31 West 52 Street, New York, the event features for the first time two workshop sessions – one on creating structural common ground between capital relief trade investors and issuers; the other on how Basel 4 .......
News 5 March 2019
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STS synthetics pending
EBA to publish report by year-end
The EBA is expected to publish a report on STS synthetic securitisations by year-end, which will then be reviewed by the European Commission. The main challenges that the supervisor will be dealing with are the lack of performance data on synthetic securitisations and the creation of STS criteria for the sector.
STS criteria for synthetic securitisations could further ......
News Analysis 1 March 2019Premium Content
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Downward drift
Low default trend continues
Global corporate defaults fell in 2018 in advanced markets and were stable in emerging markets. The persistence of the low default trend - in particular, in advanced economies - is a positive sign for capital relief trades, given that the bulk of these transactions reference European corporate loans.
The default rate for non-financial corporates with rated debt in .......
News 1 March 2019
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New fund for CDS recruit
Company hires and sector developments
ABL acquisition
Market Moves 28 February 2019
Benefit Street Partners affiliate Business Development Corporation of America has acquired a controlling interest in asset-based lender Siena Capital Finance from Solaia Capital Advisors. Siena was founded in 2012 by an ABL team backed by Solaia consisting of professionals from Bank of Ireland subsidiary Burdale Capital Finance. Siena will operate independently as a portfolio company of BDCA, with .......
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Maintaining flexibility
Fiona Walden, vp, credit and financial lines at RenaissanceRe, answers SCI's questions
Q: How and when did RenaissanceRe became involved in the securitisation market?
The Structured Credit Interview 22 February 2019
A: We were set up 25 years ago as a property catastrophe company. We have a long track record of credit reinsurance for our insurance company clients. More recently, we applied this knowledge and expertise to structured credit transactions - including significant risk transfer transactions - by providing .......