Company developments and new hires in the structured finance sector.

Acquisitions

American Mortgage Consultants (AMC), has announced the acquisition of certain personnel and the operations center of Des Moines, Iowa-based The Barrent Group. This transaction will establish a market presence for AMC in the Midwest and adds more than 50 residential mortgage professionals to its platform, further enhancing the firm’s client service capabilities. AMC plans to hire up to 150 additional mortgage professionals within the next year to join its new office in Des Moines. These individuals will support a variety of roles including securitisation underwriting for a variety of loan types. The office will also add to AMC’s capacity for the review of seasoned reperforming, non-performing, and performing assets.

CDO transferred

Dock Street Capital Management is set to assume collateral management obligations and responsibilities for Mid Ocean CBO 2000-1, a Deerfield Capital Management ABS CDO. Moody’s confirms that the assignment won’t result in the reduction or withdrawal of any of its ratings on the notes at this time. For other recent CDO manager transfers, see SCI’s database.

EMEA

JPMorgan has promoted Oldrich Masek to head of EMEA Structured Products Group, following David Lefkowitz's relocation from London to New York. Ben Peletier will succeed Masek as head of EMEA ABS origination in addition to his role of head of EMEA CLO and will report to both Masek and Lefkowitz.

North America

Mill Hill has hired Nick Pepe as head of business development and investor relations, starting September 2018. He will be replacing David Modiano who is leaving the company after two years. Pepe was previously at Citigroup as a senior member of global securitised markets.

Organisation structure update

Crestline Investors has established a new organisational structure for Crestline Denali Capital, a unit of Crestline that specialises in the syndicated leveraged loan market. The new structure was released as a result of the 1 July retirement of David Killion, who had previously served as CEO of Crestline Denali Capital with over two decades of work in the syndicated loan and CLO markets. Greg Cooper and John Thacker, both senior managing directors at Crestline Denali Capital and co-founders in 2001 of its predecessor, Denali Capital, will now serve as group co-heads and share overall executive and operational management and new fund execution responsibilities. Cooper will focus principally on investor relations and product development, while Thacker will focus principally on portfolio management. Kelli Marti, managing director, is being promoted to the position of chief credit officer, with responsibility for overseeing the firm's credit underwriting, research and credit administration activities. Cooper, Thacker and Marti will collectively comprise the investment committee for Crestline Denali Capital. David Tanny, managing director, has assumed primary responsibility for the firm's asset side counter-party relationships, and he also oversees the firm's trade execution activity.

Partnerships.

FS/KKR Advisor, a partnership between FS Investments and KKR Credit Advisors have announced that FS Investment Corporation and Corporate Capital Trust have entered into a definitive agreement under which FSIC and CCT will be merged. The combined company will have on a pro-forma basis over US$8bn in assets invested in 221 portfolio companies across 23 industries as of 31 March 2018. The boards of directors of both FSIC and CCT have approved the transaction, with the participation throughout by, and the unanimous support of, their respective independent directors. The transaction is subject to approval by FSIC and CCT shareholders and other customary closing conditions. FSIC and CCT expect to close the transaction in the 4Q18.

RFC on NPL approach

Scope is requesting comments on its non-performing loan ABS rating methodology, which consists of a flexible framework that can be implemented across different jurisdictions and applies to securitisations backed by portfolios of secured and unsecured NPLs. The agency considers loans classified as defaulted, impaired loans as defined by the applicable accounting framework and loans not classified as defaulted but for which full repayment seems unlikely to be non-performing. For unsecured loans, the analysis of recoveries takes into account loan ageing, while the analysis of secured loans considers the benefits of real estate security and any other sources of available security. Comments on the proposed methodology are invited by 24 August.

Sabadell NPL sale

Banco Sabadell has sold almost all of its real estate exposure to a Cerberus Capital Management affiliate. The transaction has been structured through the transfer of two real estate portfolios – with a combined GBV of circa €8.1bn and a net book value of circa €3.9bn – commercially identified as ‘Challenger’ and ‘Coliseum’ to newly incorporated companies (NewCos), the share capital of which will be contributed so that Cerberus owns an 80% interest in the NewCos’s share capital and Banco Sabadell the remaining 20% interest. Banco Sabadell and Cerberus will enter into a shareholders’ agreement to set forth their contractual relationships as partners of the NewCos. Solvia Servicios Inmobiliarios will remain wholly owned by Banco Sabadell and will continue to service on an exclusive basis the real estate assets included to the transaction. The agreement will create a positive impact of around 13bp on Banco Sabadell’s capital ratio of Common Equity Tier 1 (fully loaded).

SF sector forum

IMN has set up a new forum for institutional investors in the structured finance space, dubbed the Fixed Income Investor Network (FIIN). The group will provide a voice for buy-side investors and will include representatives from some of the largest institutional asset allocators to ABS, including: Charles Schwab, Eaton Vance, Grantham Mayo, Loomis, Sayles & Co., Napier Park Global Capital and PGIM Investments. FIIN will meet four times per year, with the inaugural meeting to be hosted at ABS East.

UK SLABS scrutinized

A recent UK National Audit Office report states that a £900m accounting loss was recorded in the Department of Education’s accounts resulting from the UK government’s Income Contingent Student Loans 1 securitisation, while the net loss of future receipts from student loan repayments as a result of the sale is estimated to be £604m. The face value of loans before taking account of impairments was £3.5bn and the securitisation raised £1.7bn, equating to the government receiving 48p for every £1 of loans sold – albeit the sale price was broadly in line with UK Government Investment’s estimate of market value. The report notes that UKGI prepared well for the sale, creating a structure that “encouraged investor interest and maintained competitive tension” during the process and “achieved value for money”. Regarding future sales of student loans, the NAO expects the Department of Education and UKGI to: provide transparency on the plans and their impact; reassess disposal options for every sale; and refine the value-for-money framework applied to calculate the valuations as new data on the asset class emerges.