Company hires and sector developments in structured finance

Alternatives alliance
DWS Group and Tikehau Capital have entered into an alliance, following Tikehau’s participation in the IPO of DWS in March 2018. Under the agreement, DWS and Tikehau intend to launch a joint product leveraging the two companies’ alternative asset management expertise and platforms, which is expected to launch in 2019. The partners intend to cross-invest in respective funds, with DWS planning to participate in Tikehau’s subordinated financial debt expertise and Tikehau participating in DWS’ sustainable and impact investing expertise. Other initiatives include collaborating to identify funds for potential distribution and considering co-investment opportunities for funds managed by either DWS or Tikehau, including a special situations strategy.

CLO ratings change
S&P has downgraded the class D notes issued by the Halcyon 2012-1 and 2013-1 CLOs to single-B from double-B. At the same time, it has raised its ratings on the class B notes from the 2012-1 deal and the class A2A, A2B, B and C notes from 2013-1. The upgrades reflect paydowns to the class A1 notes of both transactions, which improved overcollateralisation ratios for all classes except the class Ds.

GFMT 2018-2 warning
Fitch has issued an unsolicited comment on Galton Funding Mortgage Trust 2018-2, indicating that the prime RMBS allocates greater credit risk to senior bondholders. A key structural feature of the transaction is a non-standard risk allocation of unpaid interest on non-performing loans, which is incurred concurrently by all classes through a pari passu reduction in defined bond coupons. The agency says that the credit protection provided to investors “does not protect against unpaid loan interest and, importantly, the ratings assigned to the transaction do not reflect the risk of reduced bondholder cashflows attributed to unpaid loan interest”. As a result, the structure is more favourable for the issuer as given ratings need less credit enhancement when compared to a traditional structure, according to Fitch.

Servicing acquisition
Hoist Finance is set to lease and subsequently acquire the businesses of Maran and R&S (Maran Group) in a multistep process, in the context of their composition with creditors pursuant to Italian insolvency law. The acquisition is anticipated to add capacity and competence to Hoist’s current activities in Italy, as well as create an integrated servicing platform that enables the firm to be a full-service debt restructuring partner to the Italian financial sector. The transaction is not expected to have a significant effect on Hoist’s financial position.

Upgrade debuts
Ex-LendingClub president Renaud Laplanche’s new firm is in the market with its first unsecured consumer loan securitisation. The US$286.39m Upgrade Receivables Trust 2018-1 comprises four classes of notes and is expected to close on 30 October. Proceeds will be used to purchase the loans and related rights from Upgrade Receivables Depositor, which purchased the loans from unaffiliated transferors, as well as to fund the reserve account and pay transaction expenses.