Sector developments and company hires

ILS

Sarah Demerling has joined Walkers Bermuda as a partner in the firm's corporate, finance and funds group. With more than 17 years' experience in the financial services industry in Bermuda, Demerling adds asset management, investment funds and ILS expertise to the practice. She was previously client director at Estera Services (Bermuda) and before that a partner at Appleby in Bermuda.

Japanese risk retention eyed

A Japanese Financial Services Agency proposal to introduce a risk retention rule may result in some Japanese investors being disincentivised from purchasing securitisation positions, where an appropriate entity has not committed to hold a 5% retention piece in the transaction. In a recent client memo, Anderson Mori & Tomotsune and Milbank notes that although the rule will apply to global securitisations, given that Japanese investors are estimated to account for 50%-75% of demand for triple-A rated CLO tranches, the proposal could have a dramatic effect on the sector. The proposal stipulates that certain types of Japanese financial institutions should apply an increased regulatory capital risk weighting to a securitisation exposure, unless it has established that the ‘originator’ of the transaction retains a ‘securitisation exposure’ in the transaction equal to not less than 5% of the total underlying assets via vertical, horizontal or ‘L-shaped’ retention. In addition, the AMT/Milbank memo highlights that the retention requirement may be met by the originator retaining an alternative exposure to the securitisation, provided that the credit risk borne by the originator for the life of the transaction is at least equal to the retention amount. Unlike in the US and Europe, the Japanese retention requirement would not apply where an investor is able to judge that the origination of the underlying assets is appropriately conducted, based on various factors such as the originator’s involvement in and the quality of the underlying assets - which AMT/Milbank suggests could be used to exempt middle market and ‘open market’ CLOs. 

Strategic alternatives

Cerberus European Residential Holdings has added Towd Point Mortgage Funding 2016-Granite 3 to the deals for which it is exploring strategic alternatives with respect to the mortgage loans held within the trusts. The firm announced the move – in connection with the Towd Point Mortgage Funding 2016-Granite1 and 2016-Granite2 RMBS – in December (SCI 17 December 2018).

US

CBRE has hired Thomas Didio as vp to its debt and structured finance team. He was previously a director at Black Bear Asset Management.

Wellfleet, the performing credit business of Littlejohn, has promoted Dennis Talley and Scott McKay to md. They both joined Littlejohn in 2015 as portfolio managers to launch the Wellfleet business. Jeff Tynik has also been promoted to senior credit analyst and loan trader, having joined Littlejohn as a credit analyst in 2015.