EMEA

Citigroup has appointed Laura Coady to the newly created position of head of EMEA, structured finance syndicate desk and she will continue to report locally to EMEA co-heads of global structured finance and securitisation Peter Keller and Bob Liao, and report globally to Vikram Prasad, global head of credit syndicate desk, taking responsibility for distributing all products from the bank’s global structured finance and securitisation group. Coady was previously head of EMEA primary CLO index trading. Garo Tarossian, head of EMEA residential mortgage distribution, will now have an expanded role for distribution of other asset classes, reporting to Coady, but for RMBS distribution he will continue to report to Mark Collier and Milind Chaukar, co-heads of residential mortgage business.

Ocorian has appointed Alan Booth as md of its UK business. Booth was previously global head of product management within Deutsche Bank’s corporate services division.

North America

The Barrent Group has named Art Yeend business development director. Prior to The Barrent Group, Yeend served as md, heading both sales and marketing at MountainView Financial Solutions.  

Oakleaf has promoted Christine Brunie to md, leading its modelling and analytics group out of the New York office. She was previously executive director of structured credit portfolios at EAA Portfolio Advisers.

MUFG has announced that Scott Rodman has joined the firm as head of structured solutions for the Americas. He joins from HSBC where he was head of the US client solutions group.

New York Mortgage Trust has appointed Lisa Pendergast as director of the company, effective immediately. She is executive director of Commercial Real Estate Finance Council, a trade organisation and has previously served as md of the CMBS strategy and risk division of Jefferies and md of RBS Greenwich Capital and Prudential Securities.

Greenberg Traurig, has expanded its global corporate practice with the addition of capital markets practitioner Lee Ann Anderson as a shareholder in the firm’s Washington, DC and New York offices. Anderson will also be a member of the firm’s capital markets and finance practices. She joins from Ashurst and was previously with Sullivan & Cromwell.

Shulte Roth & Zabel has elected Stephen Schauder as partner in the structured finance and derivatives group. He has represented underwriters, issuers, lenders and borrowers across a variety of asset classes, including structured settlements, litigation advances, lottery receivables, personal annuities, timeshare loans, equipment leases and life settlements, among others. 

Lehman settlement

Lehman Brothers Holdings was last week ordered by the Southern District of New York bankruptcy court to pay US$2.38bn in compensation for its role in the RMBS crisis in 2007-2008. Trustees representing noteholders had initially argued for a settlement amount of US$11.4bn, but Judge Shelley Chapman ruled that they failed to meet a ‘burden of proof’ to show breaches on around 72,000 loans. As the Lehman bankruptcy estate’s administrator was unable to provide enough information, she ultimately relied on an earlier settlement with institutional investors that had valued claims at around US$2.4bn.

Zohar bankruptcy filing

The Zohar CDO 2003-1, Zohar II 2005-1 and Zohar III transactions have filed a voluntary Chapter 11 petition in the District of Delaware, in order to monetise their assets and pay off all allowed claims in full. The filing will stay certain litigation matters involving the Zohar funds that commenced after Patriarch Partners ceo Lynn Tilton resigned as collateral manager and was replaced by Alvarez & Marsal Zohar Management (SCI 8 February 2016). Tilton proposes that the court appoint Mark Kirschner of Goldin Associates as chief restructuring officer.

Ryan Labs Asset Management has recruited a five-person leveraged finance and CLO team from American Capital Leveraged Finance Management to provide a non-investment grade floating-rate capability in New York that complements its existing fixed-rate investment grade strategies. The group is led by Mark Pelletier - who assumes the role of senior md and head of Ryan Labs Leveraged Finance - reporting to Richard Familetti, president and cio of Ryan Labs Asset Management. Michael Cerullo, Christian Toro, Dana Dratch and Juan Miguel Estela join as mds, reporting to Pelletier. With the new hires in place, the firm is rolling out its US senior loan strategy, with US$100m in initial seeding from Sun Life Financial. 

Whole loan sale

FGH Bank is set to sell part of its loan portfolio with an outstanding balance of approximately €1.3bn to RNHB, with closing expected to occur in 2Q18, subject to regulatory approvals and successful completion of the consultation process with employee representative bodies. FGH Bank intends to phase out its activities during the course of this year and cease to exist as a separate legal entity.

NPL backstop evaluation

The EBA has published its advice on the European Commission's proposal for statutory prudential backstops on banks' provisioning practices for new loans that turn non-performing. The advice aims to provide some qualitative considerations about the design of the backstop, as well as a conservative quantitative impact analysis of the proposed measures. The results suggest that over a seven-year horizon the cumulative impact of the statutory prudential backstop would lead to a decrease in the CET1 capital ratio of 56bp, equal to 10% of retained earnings.

New risk transfer programme

Arch Capital Group confirms that it is, through a new US subsidiary and in conjunction with Freddie Mac, piloting a new mortgage credit risk transfer program, called IMAGIN (Integrated Mortgage Insurance), to attract a diversified and robust capital base to the US housing market. Arch has established a new Washington DC based subsidiary, Arch MRT, which will insure Freddie Mac and transfer 100% of the risk assumed to a panel of diversified, well-capitalised, and highly rated (re)insurers that provide high quality collateral assets in trust. This arrangement encourages additional participants and capital to support first-loss exposure in mortgages. The panel of (re)insurers will competitively bid, through a transparent process, to provide, over the long term, lower cost mortgage insurance for borrowers.

Litigation

The US subsidiaries of Nomura Holdings have filed a writ of certiorari following the ruling by the District Court, 15 May, 2015, that the FHFA proved that the offering materials for RMBS certificates issued by NAAC and NHEL and purchased by the GSEs contained material misstatements entitling FHFA to rescission. The District Court ordered the defendants to pay US$806m to the GSEs upon the GSEs’ delivery of the certificates at issue to the defendants. On 10 June, 2015, the defendants appealed. As announced in the “Notice regarding Judgment in Litigation against Subsidiaries” the United States Court of Appeals for the Second Circuit rejected the appeal. On 12 March, 2018, the defendants filed a petition for a writ of certiorari to the court stated above.

Partnerships

Apollo Global Management has partnered with Realty Partners to invest in the Italian real estate market. The strategy is to invest in assets which have potential for value enhancement (through conversions, restructuring, market repositioning). Assets can originate from ordinary and extraordinary disposals, acquisitions of real estate companies or investments in secured NPLs.

Strategic transaction agreement

Mid Atlantic Capital Group has entered into an agreement that contemplates a strategic transaction with Parthenon Capital Partners and Waterfall Asset Management. The transaction, which will not be consummated until applicable regulatory approvals (including an approval from South Dakota Division of Banking) are obtained, will provide Mid Atlantic with an opportunity to leverage the investors’ experience and resources to accelerate the development of and investment in client-centric technology, products, services and people. The transaction will also position Mid Atlantic to grow through organic initiatives and opportunistic strategic acquisitions. Also investing in the transaction with Parthenon and Waterfall is long-term industry veteran John Moody.

Euro CLO Volcker work-around

Carlyle Group’s latest €413.50m CLO, Carlyle CLO 2018-1, features a novel way to work around the Volker ruling. According to the Moody’s pre-sale, classes A-1, A-2, B, and C comprise nonvoting and exchangeable non-voting notes which are not eligible to participate in manager removal and replacement resolutions. The aim is to avoid treatment as “ownership interest” in the issuer under the Volcker Rule for the holders of such (exchangeable) non-voting notes. Depending on the proportion of notes actually issued in the form of (exchangeable) non-voting notes, this feature could potentially distort quorum in resolutions of the noteholders. However, given that any class of notes held by or on behalf of the manager or any manager related party will have no voting rights with respect to any vote in connection with the removal of the manager, Moody’s does not expect the feature to have a material negative impact on the rated notes.

Remedy payment

CVC Credit Partners has paid class X noteholders of the CVC Cordatus Loan Fund V CLO €1m to remedy an administrative error. The firm has disclosed that certain amounts payable in relation to the class X principal amortisation amount were not paid on previous payment dates when due and payable. Accordingly, the €1m payment was made in order to avoid the occurrence of a note EOD. The issuer is expected to remain in a position to pay all interest amounts - after taking into account the remedy payment - on the next payment date.

NPL action plan

The European Commission has unveiled its package of measures to tackle non-performing loans in Europe, based on a mix of complementary policy actions that target four key areas. The first measure involves amending the CRR to introduce common minimum coverage levels for newly originated loans that become non-performing, whereby if a bank does not meet the applicable minimum level, deductions from its own funds would apply. The second is enabling accelerated out-of-court enforcement of loans secured by collateral, whereby banks and borrowers can agree in advance on an accelerated mechanism to recover the value from loans guaranteed with collateral. The third is to further develop secondary markets for NPLs by harmonising requirements and creating a single market for credit servicing and the transfer of bank loans to third parties across the EU. The final element is a technical blueprint for establishing national Asset Management Companies (AMCs), which clarifies permissible public support and alternative impaired asset measures.

Emerging markets SRT

IFC and Credit Agricole have closed a synthetic risk transfer trade that will allow the bank to expand its trade finance activities, as well as support health, education and infrastructure projects in emerging markets. The transaction involves IFC making an US$85m investment in credit risk protection on a US$2bn portfolio of Credit Agricole’s emerging market trade finance and corporate loans. The bank will use the freed-up capital to make US$510m of what it terms as ‘social loans’ in emerging markets that comply with the Social Bond Principles 2017. Credit Agricole’s initial SRT with IFC in 2014 was the first such transaction focused on emerging markets credit (see SCI’s capital relief trades database)

Clifden seeks legal action

Paratus AMC has redeemed the RMAC RMBS subject to a tender offer by Clifden IOM No.1 (SCI passim) and is marketing a new securitisation – RMAC No. 1 – backed by the assets (see SCI’s pipeline). However, Clifden maintains that make-whole provision resolutions in connection with the deals have been executed on behalf of noteholders and notes that the issuers have not reserved amounts equal to the MWP distributions, as previously requested. Consequently, the firm says it has reserved all rights to the full extent permitted under law in relation to the failure of the trustee and/or the issuers to implement the MWP resolutions and to any losses that may be suffered. Separately, Clifden is seeking injunctive relief against the note trustee of the Fairhold CMBS in respect of “certain serious concerns” it has regarding the trustee’s conduct.

Toys R Us impact

Toys R Us is seeking authorisation through the bankruptcy court to wind down its US operations, liquidate existing inventory and conduct store closures, after attempts to restructure the company failed (SCI passim). According to Wells Fargo figures, 87 CMBS loans totalling US$4.11bn have exposure to Toys R Us as a tenant. However, taking into account the loan balance for the percentage of GLA occupied by the tenant and cases where only certain properties in a portfolio loan have exposure, structured products analysts at the bank suggest that the dollar volume exposure across CMBS amounts to only US$1.01bn (US$451.23m in single-property loans and US$557.43m in portfolio loans). The impact of the bankruptcy on post-crisis conduit CMBS is expected to be limited, due to industry and tenant diversification.

FNMA NPL sale

Bungalow Series III Trust (Balbec Capital) has been named as the winning bidder for pool 1 and Elkhorn Depositor (Roosevelt Management Company) for pools 2 and 3 in Fannie Mae’s latest non-performing loan sale. Pool 1 comprised 1,061 loans with an aggregate UPB of US$178.27m, pool 2 comprised 2,793 loans with an aggregate UPB of US$441.7m and pool 3 comprised 1,822 loans with an aggregate UPB of US$382.83m. The cover bid for pool 1 was 75.13% of UPB (56.8% of BPO), while for pools 2 and 3 combined, it was 77.69% of UPB (58.05% of BPO). Separately, Fannie Mae’s Multifamily Green GeMS REMIC bond (FNA 2017-M15 A2) is now included in the Bloomberg Barclays MSCI Green Bond Index.

Real estate platform launched

Crescit Capital Strategies a commercial real estate finance platform, today announced its entrance as a provider of highly structured and flexible debt products across the capital stack. It is led by Joseph Iacono, Crescit Capital Strategies ceo and Nik Chillar, co-founder. Iacono has more than thirty years of experience in the commercial real estate debt capital markets and structured finance industries, ranging from direct origination and securitization to distressed debt acquisitions and loan workouts. Nik Chillar, co-founder, will serve as Crescit Capital Strategies’ Head of Banking. Kim Diamond will serve as Crescit Capital Strategies’ head of structuring and credit. Edmund Taylor rounds out the executive team as coo. He joins Crescit Capital Strategies with over thirty years of senior coo experience in the financial services industry, including extensive work in the commercial real estate and structured finance markets.