ABS
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Indian securitisation market presents challenges
The Indian structured finance market has been around for ove...
The market revolves around Indian banks' targets for lending to priority sectors. Banks have traditionally been the largest investors in securitised debt, as they need to fulfil the Indian central bank’s requirements to lend a target percentage of their loan books to priority sectors, which are defined by the central bank and include minorities, agriculture, SMEs and export industries. The .......
Talking Point 11 November 2021
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Too slow
Disappointing timeline for call for evidence on STS reform
The European Commission’s latest call for evidence on its securitisation prudential framework review highlights a familiar pattern in the EU’s regulatory actions. The combination of an elongated timeline and the absence of a holistic approach point to a lack of momentum for the European securitisation market.
Earlier this year (SCI 17 May), the Joint Committee of the European Supervisory .......
News 11 November 2021
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First LBR PCC investor signed
Sector developments and company hires
First LBR PCC investor signed
Lloyds has announced that Ontario Teachers’ Pension Plan Board will be the first investor to support underwriting through its multi-insurance SPV, London Bridge Risk (LBR) PCC. LBR was established in January of this year with sponsorship from Lloyds, with ambitions to create a market that invites new forms of capital and allow for easier access .......
Market Moves 10 November 2021
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Multi-currency CLO closed
Sector developments and company hires
Multi-currency CLO closed
Barclays has closed a multi-currency managed cashflow balance sheet CLO. Dubbed Duke Global Funding, the £4bn-equivalent transaction is backed by 519 senior secured and senior unsecured loans extended predominantly to large corporate obligors in Western Europe and the US. The underlying loans are denominated in US dollars, sterling and euro.In terms of geographical diversification, the initial portfolio .......
Market Moves 9 November 2021
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US CLO equity outperforms
Sector developments and company hires
US CLO equity outperforms
US CLO Equity cashflows average 15.2% across 1,038 BSL transactions that have had four payment dates in 2021, according to a report from JPMorgan CLO research analysts. This is the highest since 2016, which averaged 19.6%.CLOs that were reset in 2021 fared best with a 22% average return driven in part by a small minority that .......
Market Moves 8 November 2021
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Fed set to reduce asset purchases
Sector developments and company hires
Fed set to reduce asset purchases
The New York Fed’s FOMC has increased the System Open Market Account (SOMA) holdings of Treasury securities by at least US$70bn per month and of agency MBS by at least US$35bn per month during the monthly purchase period beginning in mid-November. Additionally, SOMA holdings of Treasury securities will increase by at least US$60bn per .......
Market Moves 5 November 2021
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Electric avenue
Adoption of electric cars spells greater volatility for rental car ABS
If collateral underpinning rental car ABS is increasingly composed of electric cars then the market will be exposed to greater volatility and uncertainty, say credit analysts.
Last week’s purchase of 100,000 new Teslas by Hertz fired the starting gun on the likely increasing adoption of electronic vehicles (EVs) by rental car companies, which will be financed by securitization.
Regulatory pressure and financial incentives .......
News Analysis 4 November 2021
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Servicers facing 'unprecedented' turnover
Sector developments and company hires
Servicers facing ‘unprecedented’ turnover
US commercial mortgage servicers are facing unprecedented turnover levels and filling open positions in the tight labour market may ultimately increase the cost of servicing loans, Fitch suggests. However, the agency notes that to date, there have not been any noted declines in servicing proficiency among Fitch-rated primary, master and special servicers.
Fitch reports lower-than-average employee .......
Market Moves 4 November 2021
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Restricted issuance
STS synthetic volumes to remain constrained
STS synthetic securitisation issuance has been growing since the final framework came into effect earlier in the year (SCI 4 August), as the new regime slashes risk weights on retained tranches, while new structures boost insurer interest by allowing them to execute STS-eligible funded deals. Nevertheless, STS synthetic origination will remain constrained, given the homogeneity and collateral requirements.
News Analysis 4 November 2021
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Holding firm
European ABS/MBS market update
Primary and secondary European ABS/MBS activity is expected to pick up this week after a few slow days. Last week, ABS spreads held firm and were able to maintain a certain pre-summer equilibrium, which could further translate into November.
“We’ve seen strong levels of issuance lately, mainly in the ABS space through auto and leasing deals,” notes one .......
News 3 November 2021
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SLM EODs eyed
Sector developments and company hires
Fitch has downgraded from single-B to double-C the outstanding class A4 and B notes of SLM Student Loan Trust 2007-7, 2008-1 and 2008-4, due to the legal final maturity date of the class A4 notes being approximately three months away in January 2022 for SLM 2007-7 and 2008-1 and less than 10 months .......
Market Moves 2 November 2021
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Matryoshka doll?
Use of proceeds proving contentious for ESG securitisations
The EU taxonomy regulation and Sustainable Finance Disclosure Regulation (SFDR) are posing challenges for securitisation issuers and investors. For now, use of proceeds remains the most contentious issue.
Announced in late 2019, the European Green Deal reflects the EU’s ambitious bid to lead the world on climate action. The deal’s commitments became legally binding by the entry into .......
News Analysis 1 November 2021
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Positive prospects?
Legal changes open up Turkish NPL opportunities
Recent amendments to Turkish law potentially open doors to international investors seeking opportunities in the Turkish non-performing loan market. However, although activity could pick up in the unsecured space, questions remain about secured and lumpy pools.
Under the legislative changes, asset management companies (AMCs) may establish funds to issue ABS. Indeed, by doing so, AMCs have now been .......
News Analysis 29 October 2021
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Securitisation stamp duty eyed
Sector developments and company hires
Securitisation stamp duty eyed
Market Moves 29 October 2021
The UK government is introducing legislation within Finance Bill 2021-22 that provides a power to make stamp duty and stamp duty reserve tax (SDRT) changes relating to securitisations and ILS by secondary legislation. The power will be a freestanding provision and will allow HM Treasury to make regulations to provide that stamp duty or SDRT is .......
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Risk-sharing remit
CRT definitions discussed
Most practitioners agree that ‘risk-sharing transactions’ is the most appropriate moniker for capital relief trades, but there remains some divergence around the term. This CRT Premium Content article explores what it means for investors and issuers alike.
The term ‘risk-sharing transactions’ is becoming more common and more widely understood to denote capital relief trades, but divergences remain around what ......
News Analysis 29 October 2021Premium Content
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Rocky road ahead
Output floor implementation questioned
The European Commission has approved the long-awaited CRR3 proposal (SCI 28 October). The latest changes to the capital requirements regulation incorporate the final December 2017 Basel 3 rules into EU law. Nevertheless, banks will likely oppose the Commission’s single stack approach to the implementation of the output floor, with the industry already having called for further adjustments to the .......
News Analysis 29 October 2021
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Healthy Hertz
Securitization key to Hertz's near-fatal collapse and its resurrection
Hertz this week (October 26) announced an order for 100,000 new Tesla electronic cars for its rental fleet less than four months after it emerged from Chapter 11 bankruptcy protection - a purchase which pushed the market valuation of Tesla to over $1trn.
The news is testament to both the rapidity and comprehensiveness of Hertz’s recovery from the dark days of May .......
News Analysis 28 October 2021
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Still strong
European ABS/MBS market update
In a quieter week than of late, two full capital stack deals have been competing for investor attention in the European ABS/MBS primary market. Strong demand for both Pixel 2021 and SC Germany Consumer 2021-1 suggests that the market is still strong.
“I think both deals have been executed very well,” notes one ABS/MBS trader. “For SC Germany Consumer .......
News 28 October 2021