Sector developments and company hires

Asset management acquisition

Assured Guaranty US Holdings is set to acquire all of the outstanding equity interests in BlueMountain Capital Management and its associated entities for approximately US$160m, subject to certain adjustments, as part of a strategic objective to diversify into fee-based revenue sources. The acquisition is expected to complete in 4Q19, subject to customary closing conditions. As part of the agreement, BlueMountain co-founder, ceo and cio Andrew Feldstein will join Assured Guaranty as cio and head of asset management, while retaining his current roles at BlueMountain. Assured Guaranty intends to allocate US$500m of its financial guaranty subsidiaries’ investment portfolios over a three-year period to be managed by the new asset management platform and expects it to form the basis for further development of a presence in the asset management sector. Additionally, the firm will contribute US$60m in working capital to BlueMountain at closing and intends to provide an additional US$30m of working capital within a year of closing. US$114.8m of the purchase price will be payable in cash, with the remainder payable, at Assured Guaranty’s election, in cash, its common shares, a one-year promissory note or in a combination of such assets. As part of that payment, Assured Guaranty expects to issue US$22.5m of its common shares to Feldstein.

IO suit

Briefs have been filed in connection with a lawsuit – brought by Silian Ventures – seeking to determine whether BNY Mellon, as trustee, should pay IO noteholders of Countrywide RMBS based on the mortgages' original rates or the rates that were modified to lower levels after the onset of the financial crisis. IO holders will receive greater interest distributions if the court decides in their favour. Changes to the trustee's cashflow calculations would affect 278 legacy transactions, according to Moody’s.