NPLs
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Real estate relief
NPL provisioning rules published
The European Council of Ministers has adopted new rules for the provisioning of non-performing loans, which stipulate loss coverage for future NPLs with different coverage requirements depending on different NPL classifications. The text is a relief for Italian banks, given the application of the rules to newly created NPLs - both secured and unsecured. Furthermore, an exception to the .......
News Analysis 10 April 2019
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Positive outlook
UTP securitisation prospects improve, despite challenges
Future issuance of unlikely-to-pay (UTP) securitisations depends on the resolution of two challenges - namely, information asymmetry and the lack of hybrid servicing models. However, ABS might prove a better solution for mixed portfolios, given the presence of alternatives for large corporate UTP loans.
According to Scope Ratings’s calculations, Italian banks could dispose of €13bn to €18bn of .......
News Analysis 5 April 2019
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Obstacles remain
European Parliament postpones NPL trading vote
The European Parliament on Monday (1 April) postponed a vote on a non-performing loan secondary market directive until next week, increasing the time pressure to reach an agreement with the European Council before May’s parliamentary elections. The challenging timeframe is further complicated by controversial parliamentary amendments to the original draft, including higher initial capital for servicers and caps on fees .......
News 3 April 2019
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GACS successor
New Italian NPL scheme launched
The Italian government has introduced a successor to the GACS scheme. The replacement guarantee features a longer extension period that provides more certainty for banks, raising the prospects for non-performing loan securitisation issuance going forward.
According to Gordon Kerr, head of European structured finance research at DBRS: “GACS had a short extension period to comply with state aid .......
News 22 March 2019
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Control pursued
Indian distressed debt unit established
Deutsche Bank is setting up an asset reconstruction company (ARC) in India to buy and sell restructured non-performing loans. The move follows a trend whereby foreign investors either create or acquire existing ARCs. However, setting up such a unit from scratch is unusual and indicates a need to control the restructuring process once the NPLs have been bought.
News 21 March 2019
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GACS alternative?
Investor group completes NPL securitisation
A group of investors led by Värde, Guber and Barclays have acquired an approximately €734m GBV non-performing loan portfolio originated by 22 mutual, rural and cooperative Italian banks. The transaction is unusual for an Italian NPL securitisation, given that it has been achieved through mutualisation, as opposed to relying on a GACS guarantee.
Francesco Guarneri, ceo of Guber, .......
News 15 March 2019
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Servicing strength
Debut Spanish NPL securitisations anticipated
The Spanish non-performing loan market is reaching maturation, with the first securitisations from the sector expected this year. Developing an appropriate servicing capacity in the country has played a key role in facilitating this process.
“The fact that we envisage securitisation issuance going forward is a consequence of the maturity of the Spanish NPL market,” observes Antonio Casado, ......
News Analysis 15 March 2019Premium Content
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Mixed performance
Semi-annual NPL securitisation update debuts
Moody’s has published the first in a series of semi-annual updates on European non-performing loan securitisations, which shows that six out of eight Italian NPL securitisations it has rated that have performance history are exhibiting cumulative gross collections around or below those anticipated by their business plan, while two exceed it. Cumulative gross collections for the Evora Portuguese NPL .......
News 14 March 2019
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Formative stages
Greek NPL momentum continues
Of the investors surveyed in Ashurst’s latest global non-performing loan report, 39% state that they have already invested in Greece - a higher percentage than anticipated, given that the Greek market remains in its formative stages. This figure may be indicative of investors having acquired assets in Greece under single-name transactions or other smaller private transactions. Nonetheless, appetite remains .......
News 13 March 2019
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Servicing boost
Intrum augments Greek presence
Intrum is planning a purchase of a Greek debt servicing platform, which will act as a springboard for further non-performing loan transactions. However, it’s unclear whether the decision involves acquisition of a licensed debt servicing platform or setting one up from scratch.
“It could be either. If we can find the right platform to purchase that would be .......
News 8 March 2019
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Turkish NPL boost
Distressed debt surge anticipated
Turkish asset manager Hayat Varlik Yonetim expects non-performing loan sales in the country to jump 33% this year, as banks try to cope with a surge in corporate debt restructurings. TRY10bn (US$1.9bn) of NPL sales are anticipated in 2019, following the devaluation of the Turkish lira last summer.
“The devaluation of the Turkish lira last summer and the .......
News 1 March 2019
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Exit complete
Irish RPL RMBS refinanced
Ellington Residential Holdings Ireland is in the market with a €620m Irish re-performing RMBS dubbed Jepson Residential 2019-1. The transaction is a refinancing of European Residential Loan Securitisation 2017-PL1, sponsored by Lone Star.
“The deal is expected to be called next month, although the rationale for the move isn’t clear,” says one portfolio manager. “A lot of the underlying assets .......
News 26 February 2019
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Restructuring incentive
Greece unveils mortgage NPL boost
The Greek government is working on a plan that aims to meet ECB non-performing loan reduction targets and help improve the attractiveness of non-performing portfolios, in particular, distressed mortgages. The plan includes subsidising monthly payments and protects borrowers from foreclosures under certain conditions, although this could render it antithetical to EU state aid rules.
According to George Kofinakos, md at .......
News Analysis 22 February 2019
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Test case
Unsecured NPL transaction completed
Bank of Cyprus has signed an agreement for the sale of a retail unsecured non-performing loan portfolio with APS. Dubbed Project Velocity, the transaction is a test case that may further fuel future NPL transactions by the bank.
The contractual balance of the portfolio is €245m, representing the total amount owed by the borrower, including accrued charges. The .......
News 15 February 2019
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Juno 2 completed
BNL closes NPL securitisation
Banca Nazionale del Lavoro has completed a €968m (GBV) non-performing loan securitisation of both senior secured and unsecured loans. Dubbed Juno 2, the transaction has a short weighted average life for collections, compared to other NPL securitisations rated by Scope.
“The vector is usually delayed compared to the business plan, but in this case the procedures are at .......
News 11 February 2019
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Leviticus closed
Banco BPM completes NPL securitisation
Banco BPM has completed a €7.4bn (GBV) securitisation of secured and unsecured Italian non-performing loans dubbed Leviticus SPV. The transaction involves the transfer of the bank’s servicing platform to Credito Fondiario, which is part of a broader joint-venture trend in the Italian NPL market (SCI 14 December 2018).
“The trend is driven by the desire to monetise ......
News 8 February 2019Premium Content
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Nord LB acquisition dropped
Bank opts for owner recapitalisation
Nord LB’s owners have approved a plan to recapitalise the bank with funds from regional states and savings banks. The plan won the backing of its majority owner - the regional state of Lower Saxony, which has a 59% stake - last week, side-lining a rival offer by Cerberus and Centerbridge. The recapitalisation will further spur the bank’s shipping .......
News 6 February 2019
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SCI Start the week - 4 February
A review of securitisation activity over the past seven days
Transaction of the week
Bank of Montreal has printed a US and Canadian leveraged loan capital relief trade dubbed Manitoulin. The US$92.5m 7.3-year financial guarantee pays Libor plus 12.75%.
The transaction has been rated as triple-A on the class A notes, single-A on the class B notes and triple-B on the class C notes. Further features include the presence of .......
News 4 February 2019
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NPL securitisation flourishes
Extention of GACS to UTPs to fuel further growth?
European NPL securitisation has flourished over the past two years, reaching a total of €15bn in new issuance since 2016, with many deals coming from Italy since the introduction of the GACS guarantee. Further transactions are expected given the possibility of extending the guarantee to unable to pay (UTP) loans.
DBRS notes that there have been 26 NPL securitisations since .......
News Analysis 4 February 2019
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Growing momentum
Regulatory provisioning boosts shipping NPL prospects
The European Central Bank’s provisioning push has led to a more positive sentiment around the prospects for the disposal of shipping non-performing loans (NPLs). However, the small size of the market compared to other NPL asset classes, alongside other market dynamics, renders a long-term deleveraging drive an unlikely scenario.
2018 saw a significant uplift in shipping loan .......
News Analysis 1 February 2019
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CLOs retain top ranking
Quarterly SCI data update
CLOs remained the top asset class in terms of deal count for European and US new issuance in 4Q18, according to SCI data - although the numbers are down on those posted in Q3 (SCI 23 October 2018), reflecting market volatility in the final quarter of the year. In contrast, CLO BWIC volumes rose in both regions.
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News Analysis 24 January 2019