Acquisition

Angel Oak Commercial Lending (AOCL) has acquired a controlling interest in Cherrywood Mortgage – a national, small-balance commercial mortgage lender based in Los Angeles, California. Cherrywood will serve as the wholesale small-balance commercial lending arm of (AOCL) and is led by ceo Bill Komperda and president Ed Resendez.

Cat bond first

SCOR has sponsored a new cat bond, dubbed Atlas Capital UK 2018 which will provide the group with multi-year risk transfer capacity of US$300m to protect itself against storms in the US, earthquakes in the US and Canada, and windstorms in Europe. The risk period for Atlas Capital UK 2018 will run from1 June 2018, to 31 May 31, 2022. With this transaction, SCOR becomes the first reinsurer to use the new UK ILS regime to issue a cat bond. This transaction has received the approval of the PRA and the UK regulatory authorities. The cat bond was priced on 24 May, 2018 and closed on 31 May, 2018. GC Securities acted as sole structuring agent and bookrunner for the deal and Clifford Chance advised SCOR.

Cayman Islands

Ogier has promoted Mark Santangeli - who specialises in fund finance, asset finance and structured finance - to partner in its Cayman banking and finance practise. Santangeli joined the firm’s Cayman team in 2008, having worked in-house at Bank of Scotland Corporate, where he advised extensively on CMBS and conduit-based securitisation. He continues to advise on a variety on structured finance transactions, including CLOs, securitisation and other types of bespoke structures.

CDS market reviewed

The Bank of International Settlements (BIS) has reviewed the CDS market over the last ten years and finds that outstanding notional amounts from US$61.2trn from end-2007 to US$9.7trn in 2017. This was driven by compression immediately following the financial crisis but more recently it has been driven by the rise of central clearing. Additionally, the share of outstanding amounts cleared via central counterparties has risen rapidly, from 17% in mid-2011 to 55% at end-2017, while the share of inter-dealer trades has fallen, from 53% to 25%. At the same time, the share of CDS underlying credits rated investment grade has risen post-crisis, to 64% at end-2017. The share of CDS on sovereign entities has also risen to 16% as of end-2017. Reporting dealers continue to be net buyers of CDS protection, at US$258bn at end-2017. Hedge funds have markedly reduced their net purchases of protection from dealers, to US$16bn at end-2017.

CLO head announced

Natixis has announced Chris Gilbert as head of US CLO Banking and David Williams as head of US Global Structured Credit Solutions (GSCS) Capital Markets. Gilbert has been with Natixis since 2005 and will report to Alex Zilberman, global head of CLOs. Williams, who has been with Natixis since 2006 will continue managing US syndicate team while working closely with the structured finance banking teams on origination, business development, and managing client relationships. He will report to Michael Sierko, head of GSCS Americas.

FHSL 2006-1 tender results in

Clifden IOM No. 1 has disclosed that, as at the expiration date of its tender offer for Fairhold Securitisation CMBS notes, the principal amount of class A notes tendered for purchase was insufficient to establish its required holding of £104m and it is actively exploring options to enable it to reach the required holding. The firm also states that it considers the actions of the ad hoc group of noteholders – which is due to meet on 11 June to consider an extraordinary resolution to increase the minimum percentage of class A or class B noteholders then outstanding entitled to direct the trustee to 50.1% - not to have been in the best interests of all noteholders and plans to vote against the extraordinary resolution. If it is passed, Clifden says it may withdraw its interest in pursuing restructuring and enforcement actions in respect of the issuer.

GNMA restrictions implemented

Ginnie Mae has restricted Veterans Administration single-family guaranteed loans pooled by Freedom Mortgage Corp, SunWest Mortgage Co and NewDay USA to Ginnie Mae II custom pools only. All three lenders remain approved Ginnie Mae issuers and remain authorised to pool FHA and Rural Housing single-family insured mortgages in all eligible Ginnie Mae pool types. The restriction for Freedom and SunWest of their VA single-family loans to Ginnie Mae II custom pools is effective for 1 July 2018 issuances and concludes with 1 January 2019 issuances, while NewDay’s restriction commenced with its 1 April 2018 issuances and concludes with its 1 October 2018 issuances. The conclusion dates assume that the issuers have demonstrated, to Ginnie Mae’s satisfaction, that prepayment speeds are substantially more in-line with those of equivalent multi-issuer cohorts and such improved performance is sustainable.

Greek NPL sale

Piraeus Bank has agreed to sell to Bain Capital Credit non-performing and denounced corporate credit exposures, secured with real estate collateral, equivalent to €1.95bn total legal claims or €1.45bn on-balance sheet gross book value. The transaction is expected to generate circa 20bp of CET-1 capital, as at 31 March 2018, while reducing the NPE ratio of the bank by more than 100bp. Following the completion of the transaction, Piraeus will have no control over the servicing of the portfolio and will retain none of the risks and rewards associated with it.

ILS

Anna Pereira has joined Horseshoe Group as svp, head of treasury while the firm has also hired Mark Lavery as svp and head of marketing and communications. Pereira was previously head of captive and insurance banking at HSBC while Lavery was previously senior manager, markets at KPMG.

Clint Graham has joined Securis as a senior analyst within the non-life team and will be based in Bermuda. He was previously a quantitative risk analyst at Nephila Capital.

Guy Carpenter has hired Shiv Kumar as president and global leader of GC Securities, capital markets. Kumar was previously head of insurance structured finance at Goldman Sachs.

Morgan Management

KBRA has identified two CMBS transactions it rates with exposure to properties specifically referenced in the indictment: Ellicott Apartments (0.7% of pool) in COMM 2013-CCRE9 and Avon Commons (0.4% of pool) in FREMF 2015-K44. In each of the transactions, Robert Morgan is a sponsor and a guarantor of the related loan. KBRA examined the related loan and CMBS securitisation documents for the Ellicott Apartments and Avon Commons loans. Based on this review, KBRA believes that, if the allegations set forth in the indictment are found to be true, such finding could trigger an event of default under each of their respective loan documents and recourse to the respective guarantors. However, based upon a review of the securitisation-level documents, and the rating agency’s understanding of the facts and circumstances at this time, we do not believe that the indictment or actions alleged therein would constitute a breach of any representation or warranty by the loan seller in connection with the sale of the loans to the trust. Due to our findings, and in consideration of the size of the related loans, KBRA does not contemplate any watch placements or rating actions at this time but will continue to monitor the situation. Freddie Mac recently announced the series of Structured Pass-Through Certificates (SPCs) backed by loans that involve Robert Morgan and/or his management company, Morgan Management. On May 22, the United States Attorney’s Office for the Western District of New York in Buffalo announced that a grand jury returned an indictment alleging that Frank Giacobbe and Patrick Ogiony (principals of mortgage broker Aurora Capital Advisors), and Kevin Morgan and Todd Morgan (employees of Morgan Management), conspired to provide lenders, servicers and other investors with false financial information in connection with the origination and servicing of loans in which a Morgan Party has or had an ownership interest in the related borrower. According to the indictment, the defendants conspired to fraudulently obtain over US$167.5m of loans relating to seven properties located in New York and Pennsylvania.

North America

Algomi has appointed former MarketAxess EMEA coo Scott Eaton as ceo, focusing on further commercialising the firm’s suite of fixed income solutions. Prior to MarketAxess, Eaton was global head of emerging markets trading with UniCredit and held a variety of leadership roles in credit trading and structuring at ABN Amro, RBS, Deutsche Bank and UBS. Algomi has also named Charles Mounts (md, global head of research and design at S&P Dow Jones Indices) and James Wallin (svp in AllianceBernstein’s fixed income group) as non-executive directors.

Barrow, Hanley, Mewhinney & Strauss has hired Michael Trahan and James Silcock to its newly formed bank loan strategy as credit analysts and both will report to Nick Losey and Chet Pai. Trahan, who joins the firm as a director, brings to Barrow Hanley 13 years of experience in high yield bonds, bank loans, CDS and equities.  Most recently, Trahan served as a senior analyst at Carlson Capital and before that as a senior portfolio analyst at Highland Capital. Silcock has almost a decade of experience in high yield bonds and bank loans and he joins Barrow Hanley from CIFC Asset Management, where he was an associate.

Hunt Mortgage Group has hired Precilla Torres as senior md and head of the proprietary lending group. She will be based in New York and will report to Jim Flynn, president and cio at the firm. Torres was previously at Ares Management as co-portfolio manager and co-head of the CMBS platform.

Walker & Dunlop has hired John Gilmore as svp and md in its multifamily finance group, focused on the affordable multifamily space. Based in New York, he has extensive experience sourcing loans for execution through Fannie Mae, Freddie Mac and the Department of Housing and Urban Development. Gilmore was previously vp and senior relationship manager in the community development and investment group within KeyBank Real Estate Capital. He has expertise in complex deal structures, including structured credit facilities, tax-exempt bonds and federal and state tax credits. 

Mike Ramsay has joined Wilmington Trust as vp and client development officer. He was previously vp and business development officer in corporate trust sales at Wells Fargo.

RFC on counterparty criteria

Fitch has requested feedback on proposed changes to its structured finance and covered bonds counterparty rating criteria. The material changes include adjusting the eligibility criteria applied to collection account banks under a new commingling risk classification, resulting from Fitch's review of recent bank failures and the limited materialised commingling. If the proposed change is implemented, the agency estimates that ratings of about 6.5% of outstanding EMEA RMBS tranches will be upgraded, in most cases by one to two notches. The agency is also proposing to adjust the replacement period for issuer account banks that become ineligible to 60 days from 30 days, and to expand the use of case-by-case analysis for payment interruption risk. Feedback is invited by 1 July.

RMBS tender offer

Clifden IOM No. 1 has invited Thrones 2013-1 class A noteholders to tender their notes for cash. The firm is offering a fixed purchase price of 95% per £1,000 in principal amount of notes tendered by 17 July, with a settlement date of 20 July. There is an early tender premium of an additional 30% if notes are tendered by 22 June. Separately, Clifden has extended the expiration deadline of its tender offer for RMAC Securities No. 1 notes to 6 July 2018.

SASB CMBS on review

Morningstar Credit Ratings has placed 59 tranches from 14 CMBS that it rates under review (positive or negative) in conjunction with the release of its new US single-asset/single-borrower (SASB) CMBS methodology. The agency has placed the ratings of these tranches under review because upgrades or downgrades are likely as a result of applying this new methodology and it plans to resolve them in a timely manner. The deals under review for upgrade are Americold 2010 Trust Series 2010-ART, COMM 2013-300P, COMM 2014-TWC and COMM 2016-SAVA.