CLOs
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Global goals
Chris Whitcombe, head of European and US ABS at Challenger I...
Q: Challenger IM recently launched its first securitisation-only investment fund – the Challenger IM Global ABS Fund (SCI 1 November). What makes now the right time?
The Structured Credit Interview 20 November 2023
A: At Challenger IM, we manage assets for leading global and Australian institutions. We have been actively investing in ABS since 2005, including the private ABS market for the last decade. So, although .......
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BlackRock launches Article 8 ABS fund
Market updates and sector developments
BlackRock has launched the BlackRock Senior Securitised Fund (BSSF), its new flagship securitisation fund, in the existing BlackRock Specialist Strategies Fund range. The firm says that BSSF is designed to meet the strong demand for securitised assets from both institutional and wealth clients seeking to diversify their fixed income exposures. Clients have demonstrated a desire for the diversification benefits, .......
Market Moves 20 November 2023
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Value covered
LibreMax Capital cio Greg Lippmann and ABS head Kevin Tyler...
Q: How has the evolution of the banking system and regulatory environment over time shaped private credit markets?
The Structured Credit Interview 16 November 2023
GL: Before the global financial crisis (GFC), there were certain aggressive financial products which enabled consumers to become overleveraged, as well as light bank capital charges for investment bank holdings of structured products, which ultimately brought Lehman Brothers to default and spurred .......
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Scope sees ratings drift reverse in Q3
Market updates and sector developments
Ratings drift in structured finance instruments improved in the third quarter of 2023 for the first time in more than a year, Scope Ratings has revealed. The metric measures the ratio between upgrades minus downgrades and the total number of monitored ratings over the past year.
While the agency oversaw just 12% of 294 instruments upgraded against 17% .......
Market Moves 7 November 2023
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CLO ESG scores compared
Market updates and sector developments
Sustainable Fitch reports that European CLOs – with an average ESG Score of 50.4 - have noticeably higher ESG scores, environmental scores and social scores than North American CLOs, which demonstrate an average ESG Score of 47.9. Governance scores are broadly similar across the two regions, however.
These insights are based on an assessment of 317 European CLOs .......
Market Moves 2 November 2023
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PRA consults on CRR rules
Market updates and sector developments
The UK PRA has launched a consultation on draft rules to replace firm-facing requirements regarding securitisation under the CRR in 2H24. As such, it has published a discussion paper (DP) that raises certain key issues for feedback, in order to inform its approach - including the use of unfunded credit risk mitigation (CRM) in SRT transactions.
In particular, the .......
Market Moves 1 November 2023
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Top-tech
Private credit managers increasingly leveraging fintech
Top-tier CLO and private credit managers are increasingly leveraging fintech support to facilitate proactive management through recent issuance spikes. Siepe, for one, cites technology as the key to optimising portfolios and enabling trading into better quality credits – having closed on a milestone US$1.2bn in BSL CLOs and an additional US$500m in private credit transactions in Q3.
“By .......
News 30 October 2023
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Sculptor merger hit by litigation
Market updates and sector developments
Rithm Capital has responded to a complaint filed in the Delaware Court of Chancery by the Former EMD Group regarding the proposed merger between Rithm and Sculptor Capital Management (SCI 26 July). The group comprises the founding partners of Sculptor, including Daniel Och, Harold Kelly, Richard Lyon, James O’Connor and Zoltan Varga.
The lawsuit asks the Court .......
Market Moves 20 October 2023
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Job swaps weekly: Octagon elevates Lam to ceo
People moves and key promotions in securitisation
This week’s round-up of securitisation-related job swaps sees Octagon Credit Investors appointing senior portfolio manager Gretchen Lam as its new ceo. Elsewhere, structured finance lawyers Martin Bartlam and Elana Hahn have joined Xfinite Global and Fasken respectively.
The appointment of Lam as Octagon’s new ceo comes as the firm’s cofounder Andrew Gordon transitions into a new role as executive .......
Market Moves 20 October 2023
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US CLN market could reach US$220bn
Market updates and sector developments
JPMorgan securitised products research analysts estimate that the potential size of the US CLN market could amount to US$220bn, as banks become more comfortable with issuing the notes for capital relief purposes, following the Federal Reserve’s clarification of what defines a synthetic securitisation (SCI 29 September). Indeed, they suggest that the move may mark the beginning of a .......
Market Moves 16 October 2023
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Starting strong
Leland Hart, portfolio manager and cio of performing credit...
Q: Warwick Capital Partners closed its inaugural BSL CLO transaction – the US$400m Warwick Capital CLO 1 – last month. As a new entrant, how does Warwick’s strategy compare to that of existing managers in the market?
The Structured Credit Interview 16 October 2023
A: It’s a pretty seminal time in the CLO market – when risk retention reared its head in the US and Europe and .......
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Wake-up call
Collaboration needed for consistent CLO ESG practices
Consistency across ESG reporting is the next crucial step for sustainability disclosures in the CLO market, as transitional climate risks exert pressure across the entire value chain. ELFA’s recent CLO Carbon and Sustainability Reporting Paper underscores the necessity for collaboration to determine common practices.
Investor interest in ESG disclosures is surging throughout the structured finance industry (SCI .......
News 11 October 2023
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Rithm strengthens MSR capabilities
Market updates and sector developments
Rithm Capital has entered into a definitive agreement with Computershare to acquire Computershare Mortgage Services and certain affiliated companies, including Specialized Loan Servicing (SLS), for a purchase price of approximately US$720m. The acquisition includes approximately US$136bn in unpaid principal balance of mortgage servicing rights, of which US$85bn is third-party servicing, along with SLS’s origination services business. Following the close .......
Market Moves 6 October 2023
Roll with the changes
CLO rating upgrades on the cards
CLOs may see more rating upgrades, despite current macroeconomic challenges, as more transactions reach their amortisation periods (see SCI CLO Markets). With defaults rising across the credit universe, actively managed CLO transactions are an outlier as the collateral remains stable.
“Perhaps counterintuitively, we might see more CLO upgrades in the current environment,” stated Andrew South, S&P EMEA .......
News 4 October 2023
RRAM acquires second slate of CLOs
Market updates and sector developments
Redding Ridge Asset Management has acquired CLO management contracts totalling US$2.8bn in AUM from Gulf Stream Asset Management. With the close of the transaction, Redding Ridge will have more than US$26bn of AUM and expects a seamless integration of the contracts and to actively manage the new portfolios consistent with its disciplined CLO strategy.
Redding Ridge is an .......
Market Moves 3 October 2023
Next level
ESG back-reporting gaining traction
ESG back-reporting may be the next step for sustainable disclosures as the battle to beat greenwashing continues. The GSEs are leading the back-reporting charge, with the introduction of Fannie Mae’s Social Index calculations and Freddie Mac’s historical data file release for all active and inactive MBS pools since 2010 (SCI 18 August 2022).
“They are really driving .......
News Analysis 29 September 2023
Wilmington bank adds CLO expertise
Market updates and sector developments
WSFS Financial Corporation’s global capital markets team is expanding into the CLO market, as it seeks to grow its wealth business and generate fee income on a national scale. To support this expansion, the company has recruited two new associates with expertise in CLOs.
WSFS Global Capital Markets provides global services to the leveraged loan and capital markets, .......
Market Moves 28 September 2023
BXCI to offer 'one-stop solution'
Market updates and sector developments
Blackstone has integrated its market-leading corporate credit, asset-based finance and insurance groups into a single new unit, named Blackstone Credit & Insurance (BXCI). Credit and insurance is Blackstone’s fastest-growing segment – more than doubling to US$295bn in assets under management over the last three years.
The new structure is designed to further accelerate growth by creating a more .......
Market Moves 15 September 2023
Lift-off
CLO issuance takes flight in active summer
CLO volumes in both the primary and secondary markets have accelerated in the third quarter so far, particularly in the US, after a slow first half of the year. But a sluggish syndicated loan market, dominated by a glut of refinancings and amend and extend deals, mean the flurry of activity could settle somewhat in the months ahead.
News Analysis 15 September 2023
RFC issued on CLO good practices
Market updates and sector developments
IOSCO has called for an improvement in practices in the leveraged loan market and is seeking feedback on a number of good practices it is proposing in connection with CLOs. The organisation notes that a “prolonged borrower-friendly environment” has impacted market practices, giving rise to covenant-lite leveraged loans, increased complexity of documentation and the aggressive use of EBITDA adjustments.
Market Moves 14 September 2023
Pressure on UK BTL loans in RMBS portfolios
Market updates and sector developments
The UK buy-to-let mortgage market is likely to see an increase in arrears, a reduction in origination volumes and higher rates of home repossessions in the months ahead. Analysis of RMBS portfolios by DBRS Morningstar highlighted headwinds in the form of tenant affordability, stricter regulations and changes in taxation that are likely to put pressure on BTL landlords.
Market Moves 11 September 2023