Company hires and sector developments

Agency heads announced

Morningstar Credit Ratings (MCR) has named Erin Stafford as head of the combined DBRS/MCR North American CMBS group and Quincy Tang as head of the combined US RMBS group, having both served in similar positions at DBRS. The pair will report to Claire Mezzanotte, who will be the head of global structured finance following the successful integration of the two ratings businesses. Mezzanotte served in a similar role at DBRS for more than 12 years and will report to Detlef Scholz, president of the combined entity. Former head of MCR Brian Grow will assume the role of head of US business strategy for the combined entity, also reporting to Scholz.

Bank fined over MBS trading failures

The US SEC has ordered Nomura to repay approximately US$25m to customers for its failure to adequately supervise traders in mortgage-backed securities. The SEC finds that Nomura bond traders made false and misleading statements to customers while negotiating sales of commercial and residential mortgage-backed securities. To settle the charges that it failed to reasonably supervise its traders, Nomura agreed in the two orders to be censured and to reimburse customers the full amount of firm profits earned on any RMBS or CMBS trades in which a misrepresentation was identified, paying over US$20.7m to RMBS customers and over US$4.2m to CMBS customers.  Nomura also agreed to pay a US$1m penalty in the RMBS-related case and a US$500,000 penalty in the CMBS-related case. Both orders note that the penalty amounts reflect substantial cooperation by Nomura during the SEC’s investigation, including remedial efforts by the firm to improve its surveillance procedures and other internal controls.

BUMF 6 update

In another development in the Business Mortgage Finance 6 case, the interim application (as defined in the announcement dated 9 July 2019) has been heard and granted by the court on 11 July 2019. As such, the high court has ordered that neither Greencoat Holdings Limited (GHL) nor Portfolio Logistics Limited (whether by itself, its directors, servants, employees and agents) shall hold itself out or act as if it were duly appointed as an additional or separate trustee or as an agent or any trustee duly appointed under the terms of the trust deed. GHL (whether by itself, its directors, servants, employees and agents) shall not hold itself out or act as if it were duly appointed as the cash/bond administrator or the special servicer under the terms of the master securitisation agreement dated 18 May 2007.

Neither Patrick Anthony FitzSimons nor Alfred Olutayo Oyekoya (whether by himself, his servants, employees and agents) shall hold himself out or act as if he were duly appointed as a receiver of any of the Issuer's property. Neither Oyekoya nor Maria Stoica (whether by himself or herself, his or her servants, employees and agents) shall hold himself or herself out or act as if he or she were duly appointed as a director or other officer of the issuer; and FitzSimons and Oyekoya must disclose in writing on or before 4pm on 15 July 2019, to the issuer and its solicitors, the person or persons to whom they contend that the loans outstanding were sold, to be verified by way of affidavit sworn by both of them.

The issuer further wishes to inform noteholders that its substantive claim is to be listed to be heard by the court (on an expedited basis) on 25 and 26 July 2019 with a time estimate of one and a half days.

Elizabeth Finance 2018-1

Further to the receipt by the special servicer of a notification from the mezzanine agent stating that that the mezzanine lender wished to make a cure payment in respect of the outstanding loan event of default which occurred as a result of the loan to covenant breach under the Maroon loan. Such cure payment has now been received and, accordingly, the loan event of default has been remedied and the Maroon loan is now a corrected loan.

Mortgage portfolio acquisition

Arbuthnot has agreed to purchase a portfolio of residential mortgages totalling approximately £266m for a discounted rate of 97.2%. The transaction is expected to complete on 8 August 2019 when the mortgage contracts will be released from the securitisation vehicles in which they are currently held.

The mortgages are being acquired from Raphael Mortgages and Magellan Funding No. 2. Raphael Mortgages has been in run off since it was originated by Edeus Mortgages and Victoria Mortgage Funding between 2005 and 2008, while Magellan was originated in 2018 and 2019 by Magellan Homeloans. Both portfolios are geographically distributed around the UK.

The loans have very similar characteristics to the portfolio that the bank acquired from the administrators of the Dunfermline Building Society in December 2014. The bank notes that this portfolio has performed “very well” over the past four and a half years, with credit losses totalling only £40,000 compared to forecast losses at the time of the acquisition of approximately £3m.

Pre-2019 STS application

Santander has submitted an STS notification to ESMA regarding pre-2019 securitisations issued from its Holmes programme to ESMA and the FCA that the requirements of articles 19 to 22 of the Securitisation Regulation have been satisfied in respect of the designation of the notes under, the STS framework of the Securitisation Regulation (the STS notification).

Vida acquisition

RedBird Capital Partners and Reverence Capital Partners are set to acquire Vida Capital, an alternative asset management platform specialising in non-correlated investment strategies, including ILS. Vida's president and ceo Jeff Serra - along with members of the management team - will invest alongside RedBird and Reverence in the transaction, which is expected to close by 4Q19, subject to customary closing conditions. This investment will provide the company with greater financial and operational resources to continue building its proprietary analytical capabilities and expanding its product set.