CLOs

  • Middle ground?

    Middle market CLO credit agreements being renegotiated

    Many of the borrowers of the loans underlying US middle market CLOs are facing severe economic distress because of the Covid crisis and recessionary fears. As a result, they are renegotiating and amending their credit agreements to avoid breaching their financial maintenance covenants, which has given lenders an opportunity to improve terms from their perspective as well.

    “Many .......

    News 26 August 2020

  • FDIC sued over Madden rule

    Sector developments and company hires

    FDIC sued over Madden rule
    The states of California, Illinois, Massachusetts, Minnesota, New Jersey, New York, North Carolina and the District of Columbia last week filed a lawsuit in the US District Court for the Northern District of California against the FDIC over its final rule clarifying that when state-chartered banks sell, assign or transfer a loan, an interest rate that .......

    Market Moves 25 August 2020

  • Skilled nursing CMBS eyed

    Sector developments and company hires

    Skilled nursing CMBS eyed
    DBRS Morningstar is reviewing its ratings on the CSMC 2019-SKLZ, Greystone CRE 2018-HC1 and CHC 2019-CHC CMBS, which are secured primarily by skilled nursing facilities. The agency warns that in the coming months, nursing homes and their parent companies may face significant legal liability as a result of the high death toll at nursing homes during .......

    Market Moves 24 August 2020

  • Seasoned QMs proposed

    Sector developments and company hires

    Seasoned QMs proposed
    The CFPB has issued a notice of proposed rulemaking (NPRM) to create a new category of seasoned qualified mortgages, with the aim of encouraging innovation and to help ensure access to a responsible, affordable mortgage credit market. To be considered a seasoned QM under the proposal, loans would have to be first-lien, fixed-rate covered transactions that have .......

    Market Moves 20 August 2020

  • New targets

    US CLO spread and issuance targets raised as previous levels already met

    US CLO triple-A and triple-B secondary spreads are now at 150bp and 450bp, while net primary supply passed US$27bn this week. As a result, post-Covid crisis targets for the entirety of 2020 set by JPMorgan CLO research analysts have already been met or exceeded and have consequently been revised upwards.

    “It seemed almost inconceivable spreads would tighten so .......

    News 20 August 2020

  • Special servicing assets transferred

    Sector developments and company hires

    Special servicing assets transferred
    The assignment of substantially all of the assets of C-III Asset Management to Greystone Servicing Company, pursuant to the applicable PSA associated with each of the C-III specially-serviced CMBS, is complete. The assignment includes 64 transactions rated by Moody's and 28 Moody's-rated US conduit CMBS that hold C-III specially-serviced companion loans, but excludes the non-C-III specially-serviced .......

    Market Moves 18 August 2020

  • Repeat patterns

    CLO equity activity continues to be challenged

    The US CLO primary and secondary markets broadly appear to have bounced back from the early stages of the Covid crisis with spreads tightening and revived investor participation. However, long-standing trends at the bottom of the stack continue to challenge equity activity.

    Up until the summer lull took full effect last week, 2020 has seen extremely high levels .......

    News Analysis 12 August 2020

  • Piraeus taps HAPS

    Sector developments and company hires

    Piraeus taps HAPS
    Piraeus Bank has filed an application for inclusion of its Phoenix non-performing loan securitisation under the Hercules Asset Protection Scheme (HAPS). The total gross book value of the portfolio is €1.9bn, the majority of which relates to mortgage loans, and the application is in connection with a Greek state guarantee on senior notes with a total gross .......

    Market Moves 11 August 2020

  • CMBS repeat loan volume declines

    Sector developments and company hires

    CMBS repeat loan volume declines
    The percentage of US CMBS repeat loans dropped to 17.7% in 2019 and to 13.9% in 1H20, down by 21.4% year-over-year, according to DBRS Morningstar figures. Nevertheless, the volume of CMBS loans refinanced into CRE CLOs has remained strong, with over two billion loans exiting through such vehicles.

    Based on an analysis of CMBS .......

    Market Moves 10 August 2020

  • Problem solving

    Paul Wilden, global head of capital markets at Apex Group, answers SCI's questions

    Q: How is Apex Group involved in the securitisation market?
    A: We provide a combination of SPV administration, trustee and agency services to a broad cross-section of asset classes. Our capital markets business is broadly sector agnostic.

    Q: What are the firm’s key areas of focus today?
    A: Given the proliferation of private debt funds, one area where we add .......

    Provider Profile 10 August 2020

  • Alternative CLO ETF announced

    Sector developments and company hires

    Alternative CLO ETF announced
    Alternative Access Funds (AAF) has announced the registration of its new AAF First Priority CLO Bond ETF, which is scheduled to become effective on 14 August and - if all approvals and launch objectives are met - begin trading in early September under the ticker ‘AAA’. The new ETF will focus its investments in US dollar-denominated .......

    Market Moves 7 August 2020

  • Middle market JV agreed

    Sector developments and company hires

    Middle market JV agreed
    PennantPark Investment Corporation (PNNT) has formed a joint venture with the private credit investment business of Pantheon to create PennantPark Senior Loan Fund I (PSLF). The strategic transaction seeks to enable PennantPark to leverage its middle-market lending capabilities and capitalise on compelling senior loan opportunities amid historic market volatility. Pantheon has invested US$35m in capital to .......

    Market Moves 5 August 2020

  • MM CLO test failures rise

    Sector developments and company hires

    MM CLO test failures rise
    The continued deterioration in credit quality of issuers due to the coronavirus pandemic resulted in a large number of US middle market CLOs failing a variety of tests for the first time in 2Q20, according to Fitch’s latest report on the sector. Of the 58 MM CLOs covered in the report, 23 failed at least one .......

    Market Moves 4 August 2020

  • Euro CLO equity edges ahead

    Sector developments and company hires

    Euro CLO equity edges ahead
    European CLO equity cashflow returns average 9.3% year-to-date and - as all CLOs in reinvestment are currently paying - the full-year 2020 cashflow return is likely to be low-teens, according to a new report from JPMorgan CLO research analysts. As such, European equity pieces have edged ahead of their US counterparts, currently returning 8% year-to-date .......

    Market Moves 3 August 2020

  • Nuanced approach

    Call for clarity in defining ESG

    A nuanced approach to ESG considerations is emerging within the securitisation market. Nevertheless, the Covid-19 pandemic has put social and governance factors in the spotlight.

    Anuj Babber, head of ABS research at M&G Investments, says: “The securitisation industry is at the infancy of incorporating ESG considerations into its credit and investment decisions. What we are seeing is that .......

    News 3 August 2020

  • GSE results improve

    Sector developments and company hires

    GSE results improve
    Both Fannie Mae and Freddie Mac have reported sharply improved Q2 results, despite the ongoing housing market dislocation as a result of Covid-19. Fannie Mae said net comprehensive income was US$2.53bn, compared to US$476m in Q1, while Freddie Mac had income of US$1.94bn compared to US$620m in Q1. Both GSEs had much lower than usual profits in .......

    Market Moves 31 July 2020

  • AGs fight Madden rule

    Sector developments and company hires

    AGs fight Madden rule
    The attorneys general of California, Illinois and New York have filed a suit against the OCC’s ‘valid when made’ rule (SCI 1 June), which they claim would allow the federal government to pre-empt state usury laws and allow third-party entities “to prey on vulnerable” borrowers. The AGs note that the ability to pre-empt state usury .......

    Market Moves 30 July 2020

  • Lag lustre

    Slower recovery in CLOs provides advantages and opportunities

    Secondary CLO trading desks either side of the Atlantic are reporting greater re-engagement from the buy-side, which is helping to support prices. However, such support appears to be insufficient to prevent the CLO market lagging the recoveries seen elsewhere.

    “CLOs have underperformed equity and other credit markets,” concedes Miguel Ramos Fuentenebro, co-founder of Fair Oaks Capital. “But in my view, .......

    News Analysis 30 July 2020

  • CLO ETF prepped

    Sector developments and company hires

    CLO ETF prepped
    Janus Henderson Investors has filed a preliminary registration statement with the US SEC in connection with the Janus Henderson AAA CLO ETF (JAAA), which is expected to launch on 22 October and will be offered to US investors. The fund will be managed by portfolio managers John Kerschner and Nick Childs, while Jessica Shill will serve as .......

    Market Moves 29 July 2020

  • ILS issuance remains resilient

    Sector developments and company hires

    ILS issuance remains resilient
    US$2.8bn of property catastrophe bond limit was placed in 2Q20, bringing the total issued year-to-date to US$6.5bn, according to Aon Securities’ latest ILS Update report. In comparison, 2019 saw a total of US$5.4bn in property cat bond limit placed for the entire year. The total amount of property cat bonds outstanding is marginally down on 2019 .......

    Market Moves 28 July 2020

  • CLO equity defies predictions

    Sector developments and company hires

    CLO equity defies predictions
    US CLO equity cashflow performance is defying pessimistic predictions, according to a new report from JPMorgan CLO research analysts. As of 23 July reporting, US CLO equity on average paid 8% cashflow year to date (based on 842 tranches or circa 70% of the universe) and the report estimates 89% of equity is paying, compared to .......

    Market Moves 27 July 2020
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