Complete news archive
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Execution queries
Questions linger over funded insurer SRTs
Originators of significant risk transfer transactions have welcomed the trio of innovative funded insurer trades from Credit Risk Transfer Solutions (SCI 27 May). Even though all three deals were successfully executed, questions have been raised about the potential cost and pricing of future transactions, however.
CRTS’s deals are generally mezzanine trades and involve an investment platform managed by the broker .......
News Analysis 11 June 2021
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NPL secondary market measures agreed
Sector developments and company hires
NPL secondary market measures agreed
Market Moves 10 June 2021
The European Parliament and European Council have agreed on common EU standards regulating the transfer of non-performing loans from banks to secondary buyers while protecting borrowers’ rights. The measures are designed to foster the development of secondary markets for credit agreements originally issued by banks and qualified as non-performing, enabling third parties to purchase such .......
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Arch markets MILN
Second Bellemeade deal of 2021 in the market, pricing soon
Arch is currently in the market its second mortgage insurance-linked note (MILN) of the year, and the trade is expected to price tomorrow or Friday, say sources.
The transaction, dubbed Bellemeade Re 2021-2, should close next week or the week after.
Overall deal size is expected to be around $500m, and it will consist of five tranches: the M-1A M-1B, M-1C, .......
News 9 June 2021
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Positive prospects
Rating upgrades boost default outlook
The number of ‘weakest links’ – issuers rated single-B-minus or lower with negative outlooks or ratings on credit watch with negative implications – decreased to 353 as of 30 April 2021 and is nearing pre-pandemic levels of 282, according to a new report from S&P. Indeed, accommodative financing and an economic recovery contributed to an increase in positive rating .......
News 9 June 2021
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SCI Start the Week - 7 June
A review of securitisation activity over the past seven days
Last week's stories
News 7 June 2021
Canuck rumours
Canadian banks said to be circling CRT
Capital cushions
Buoyant CET1 levels explain CRT reluctance
Domi debut
Domivest transaction attracts strong investor appetite
FHFA under fire
Arch takes aim at FHFA report on GSE CRT
New moves
Angel Oak Capital discusses its issuance of the first US non-agency social bond securitisation
Pandemic hedges
CRT solutions for pandemic events mulled
Positive prospects
Italian .......
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Euro CLOs could still soften
Sector developments and company hires
Euro CLOs could still soften
European CLO new issue triple-A spreads are now out to 87bp-88bp from their post-Covid tights of 79bp-80bp. While there appears to be considerable support at current levels, technicals could yet push them to the low-90s, according to Bank of America European CLO research analysts.Offsetting factors currently at play include broader credit market direction, rates moves .......
Market Moves 7 June 2021
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Revised expectations
Italian NPL business plans underperform
Italian NPL transaction collections are largely underperforming expectations, partly due to the impact of the pandemic, according to the latest data. Some 21 Italian NPL securitisation servicers have updated their business plan at least once and only two servicers have revised their latest gross collection expectations upwards, while ten trades have been downgraded due to a combination of Covid-related factors, .......
News 4 June 2021
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New moves
Rob McDonough, director of ESG and regulatory initiatives at...
1./Can you provide more detail on the framework you developed to quantify the deal’s social impact at the loan level?
The core strategy underpinning the formation of Angel Oak’s Non-QM mortgage lending operations in 2011 was to address the material social inequities caused by the tightening of mortgage underwriting standards under the Dodd-Frank Act and other legislation in the aftermath of the .......
The Structured Credit Interview 4 June 2021
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Pandemic hedges
CRT solutions for pandemic events mulled
Munich Re’s Epidemic Risk Solutions (ERS) unit is targeting credit risk transfer solutions that incorporate pandemic events, although the initiative remains in its early stages and coverage will for now amount to only an economic hedge without capital benefit.
The latter is currently not available to banks under existing Basel rules, but this could change as the ESG agenda across credit markets .......
News 4 June 2021
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Positive prospects
Italian NPL ABS growth pending
Italy’s NPL market remained busy last year despite Covid-related uncertainty, and investor demand for Italian NPL sales and securitisations is expected to persist this year as the economy recovers.
Italian banks' non-performing loans (NPLs) fell to 4.1% of their gross loans in December 2020 from 6.7% a year earlier, down materially from a peak of 17% in 2015, according to .......
News Analysis 4 June 2021
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Capital cushions
Buoyant CET1 levels explain CRT reluctance
Dealers agree that this year has been quieter in the CRT market in USA and Canada than had been anticipated - with the honourable exception of the ground-breaking Texas Capital Bank deal in March.
“It is a very strange time. It feels like a lot of banks are on the sidelines,” says a source in the US.
The renaissance of the North .......
News Analysis 3 June 2021
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FHFA under fire
Arch takes aim at FHFA report on GSE CRT
David Gansberg, president and ceo of Arch Mortgage Insurance, has taken serious issue with the recent Federal Home Financing Authority (FHFA)’s report on the GSE CRT programme, published last month.
Writing in Housing Wire last week, Gansberg accuses the FHFA of missing out vital evidence on the CRT scheme to present a distorted picture of its efficacy.
The FHFA report, titled Performance of .......
News 3 June 2021
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Canuck rumours
Canadian banks said to be circling CRT
Rumours continue to swirl about the possibility of an imminent regulatory capital relief trade issued by a Canadian bank.
In January, there were strong rumours that a CRT trade was in the offing in the near future, probably from Scotia. These rumours have recently resurfaced, though as yet nothing has come to light. It was thought originally that Scotia would issue .......
News 3 June 2021
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Risk transfer round up-3 June
CRT sector developments and deal news
Sabadell is believed to be prepping a capital relief trade backed by SME loans that is expected to close in 3Q21. The bank’s last significant risk transfer trade was finalized in June 2020 (see SCI’s capital relief trades database).
....... News 3 June 2021
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Domi debut
Domivest transaction attracts strong investor appetite
The debut STS-compliant buy-to-let (BTL) RMBS transaction, issued by Dutch lender Domivest and dubbed Domi 2021-1, has now closed and the transaction saw significant demand across the capital structure and also from new investors, according to the borrower.
Investor response to the transaction demonstrates the validity of the structure and the market is likely to see more of it in the future, suggests .......
News 2 June 2021
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Private debt investors doubt ability to handle defaults in post-pandemic downturn
Contributed thought leadership by Ocorian
An overwhelming majority (87%) of capital markets investors are pursuing direct lending strategies, though almost half (47%) lack confidence in their ability to manage loss recoveries, which could have serious implications if corporate defaults rise as pandemic-driven government support schemes are withdrawn. This is according to a new Ocorian report, entitled ‘Navigating CovExit: searching for value in the debt markets’, which .......
Talking Point 1 June 2021
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True lending truth
Senate vote to reject True Lender will not affect loan securitizations
Denounced as a brake upon consumer lending, the recent Senate vote to strike down the so-called ‘True Lender Rule’ is a storm in a teacup, say lawyers.
The rule had only become effective in December 2020 and had been the subject of state attorney general (AG) challenges from the outset, they point out. Moreover, the great bulk of loans that found their .......
News Analysis 28 May 2021
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ETL waiver requested following cyberattack
Sector developments and company hires
ETL waiver requested following cyberattack
Market Moves 28 May 2021
European truck lease provider Fraikin SAS was subject to a ransomware attack that started on 11 May. S&P notes that the credit quality of its two securitisations - FCT Eurotruck Lease II and FCT Eurotruck Lease III (ETL II and III) - is unlikely to be affected, providing the company can make a swift return .......
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Moving forward
Positive consumer sentiment emerging post-pandemic
As the European securitisation market moves beyond the coronavirus crisis, an overall positive picture appears to be emerging. However, the withdrawal of governmental support measures remains a risk for many jurisdictions in the region.
“As we came out of the financial crisis in 2009, lending was picking up, both net and gross levels. The pandemic hit and there .......
News 28 May 2021