CLOs
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Inaugural post-crisis CLO prepped
Sector developments and company hires
CLO manager comeback
AIG is marketing its first BSL CLO since the financial crisis, totalling US$503.15m. Dubbed AIG CLO 2018-1, the transaction is provisionally rated by Morningstar as triple-A on the US$296.5m class A notes. It does not have ratings on the rest of the notes.
Fairhold development
Fairhold Securitisation Limited has issued a notice that the new respondents, as .......
Market Moves 21 December 2018
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Middle march
Boost for middle market and hybrid CLOs
The US SEC’s no-action letter in connection with a recent Golub Capital CLO paves the way for middle market CLO managers to comply with risk retention requirements by holding through a BDC (SCI 21 September). The move effectively allows managers to transition loans between their BDCs and a CLO, and has the potential to significantly boost US middle .......
News Analysis 21 December 2018
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Disclosure draft not endorsed
EC refuses to endorse draft technical standards
The European Commission has stated that it only intends to endorse the draft technical standards on disclosure requirements, under the EU Securitisation Regulation prepared by ESMA, once certain amendments have been made. Market participants have suggested that this was not unexpected and could in fact buy more time for firms to install the necessary systems required to comply with reporting standards, when .......
News 20 December 2018
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Cross-currency basis
US CLO market update
All but a few US CLO new issues have been postponed until 2019, although at least one deal is set to price imminently.
“Some third-tier CLO managers are still trying to get deals through,” says one trader. “This has been a tough time to get the best of deals done, so lower-tier managers are struggling.”
However, the .......
Market Reports 19 December 2018
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Japanese dependence
European ABS market update
European ABS markets have effectively closed for the year. Deals in the pipeline are now expected to price in early 2019.
Looking ahead to 1Q19, one trader comments: “For UK buy-to-let and non-conforming RMBS, activity will depend 100% on what happens with Brexit. Unless we have more clarity about how Brexit will play out, investors are going to be .......
Market Reports 19 December 2018
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ILS ventures launched
Sector developments and company hires
ILS
Rewire Holdings and Vida Capital have announced the formation of Merion Square Capital, a joint venture which combines the two companies. The asset manager has established an open-ended fund structure which will primarily invest in ILS with an emphasis on property and casualty insurance, as well as annuities and mortality-related products. Merion Square will be led and .......
Market Moves 19 December 2018
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Cerberus explores RMBS options
Sector developments and company hires
Granite alternatives
Cerberus European Residential Holdings is exploring strategic alternatives with respect to the mortgage loans held in the Towd Point Mortgage Funding 2016-Granite1 and 2016-Granite2 RMBS, which will become eligible for optional redemption from April and May of 2019 respectively. The firm has engaged Morgan Stanley and Bank of America Merrill Lynch as its financial advisors to .......
Market Moves 17 December 2018
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ABSPP plans published
Sector developments and company hires
APP reinvestment set
The ECB has outlined the technical parameters for the reinvestment of the principal payments from maturing securities purchased under its asset purchase programmes after net asset purchases cease at end-December 2018. It expects to reinvest ABSPP redemptions back into the ABS market and CBPP3 redemptions back into the covered bond market. The bank says it will aim .......
Market Moves 14 December 2018
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Running dry
Euro CLO secondary market update
The European CLO primary pipeline is running dry. Traders are increasingly looking at BWIC activity instead.
Several CLO BWICs are out for the bid today. “Yesterday saw a bit of a turn-around in terms of BWIC activity,” says one trader, “though the market is still a little weak and cautious.”
CLO bonds are pricing significantly wider .......
Market Reports 14 December 2018
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STS guidelines published
Sector developments and company hires
P2P head hired
Dynamic Credit has hired Giles Andrews as chairman of its supervisory board. The board will have three members and serves to strengthen the corporate governance of Dynamic Credit Group (DCG), which comprises of the asset manager and direct lender Dynamic Credit and the investor servicing platform LoanClear. Andrews is co-founder of Zopa and, in addition to his .......
Market Moves 13 December 2018
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Global leader appointed
Sector developments and company hires
Amended complaint filed
The state of Colorado has filed a Second Amended Complaint relating to state court actions against Avant and Marlette, alleging that the platforms have violated its Uniform Consumer Credit Code (SCI 12 May 2017). According to a Chapman and Cutler client memo, in addition to making the same claims against the platforms, the state is suing .......
Market Moves 12 December 2018
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Libor consultation launched
Sector developments and company hires
ILS
Peak Reinsurance Company has launched Asia’s first sidecar transaction via a new Bermuda-domiciled special purpose insurer, Lion Rock, to provide collateralised retrocession for part of Peak Re’s global property reinsurance risk portfolio. The establishment of this special financial structure, referred to as a “reinsurance sidecar”, allows investors to take on the risk and benefit from specific books .......
Market Moves 11 December 2018
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Selling spike
US CLO market update
There has been a spike in selling of investment grade paper on the US CLO secondary market, coming mostly from the insurance sector. In past cycles, insurance companies have been more likely to hold on to their assets, but currently seem willing to sell.
“We are not sure if it is year-end cleansing or if this is more .......
Market Reports 11 December 2018
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Reaching capacity
New CLO managers continue flocking to Europe
Seven new CLO managers are warehousing assets, with European CLO platforms ready to issue in 1Q19. Most of the new entrants are US managers expanding into Europe, but the increasing number of managers has sparked concerns that the European market may be reaching capacity.
This year in Europe, five new CLO managers have priced deals, adding to the .......
News Analysis 7 December 2018
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Bid scarcity
European ABS market update
A major UK bank is focusing efforts of European NPLs in the coming weeks, as spreads continue to widen in the CLO and ABS primary markets.
“We are running a few private processes, which are keeping us busy, and we will hopefully conclude them over the next couple of days,” says a trader.
The trader comments that .......
Market Reports 7 December 2018
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BTL securitisation planned
Sector developments and company hires
Europe
Accunia has promoted Mads Romild as head of Accunia’s CLO platform. Romild will continue as cio and head all Accunia investment strategies. Andres Garcia Bartolome and Rajiv Thaker are also promoted to senior portfolio managers and will be responsible for the portfolio management of the three existing and all new Accunia CLOs. Romild previously held a position as chief portfolio .......
Market Moves 6 December 2018
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Deals pulled?
US CLO market update
Several US CLO deals are believed to have been pulled from the pipeline and pushed back to 2019, amid growing concerns over market conditions.
“What we are trying to do right now is to gauge customer demand,” says one trader. “We are trying to find out what our customers want and at the moment we are not getting ......
Market Reports 6 December 2018Premium Content
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Cheaper deals
European CLO market update
The European CLO market seems stronger than it was last week, but still relatively volatile.
“I suppose good managers get deals done; I think that’s the bottom line,” says a trader. “For managers that are perceived to be worse, it is harder now.”
He continues: “November was an expensive month to price new deals in Europe. We .......
Market Reports 5 December 2018
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Enforcement uncertainty
Set-back for STS-eligible issuance
The recent statement issued by the Joint Committee of the ESAs (SCI 4 December) is unlikely to be sufficient to assuage securitisation market concerns on its own. Such regulatory uncertainty is expected to further delay the emergence of STS-eligible securitisations in the pipeline.
“The statement by the Joint Committee of the ESAs acknowledges the concerns about the .......
News 5 December 2018
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Print and sprint
US CLO market update
US CLO BWIC activity is booming ahead of tomorrow’s market holiday in honour of former president George H.W. Bush.
Bid-lists have mainly been triple-A oriented, whereas demand for triple-B bonds has faded. Double-B bond prices are 1.5 points worse off.
“People are re-evaluating double-B bonds based on market value (MVOC) and are focusing on high quality,” .......
Market Reports 4 December 2018
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Activity upsurge
European ABS market update
The European primary and secondary ABS markets are seeing a surge in activity, due to uncertainty over the next quarter.
“After the high volatility last month, I was expecting a slow-down,” says one trader, surprised by the activity.
He suggests that market ambiguity around the next quarter is driving it. “The consensus is that things will only get choppy from .......
Market Reports 4 December 2018