Sector developments and company hires

EMEA
BTIG has established a fixed income credit division in London to service clients across EMEA. The team is led by Michael Carley, md and head of European fixed income credit, who joined BTIG in New York last year. Bobby Dziedziech (director and senior high-yield and distressed trader), Laurent Jastrow (director and senior distressed sales trader and sourcing specialist), Noah Postyn (director and senior high-yield sales trader) and Amreetpal Summan (director and senior financials trader) have also joined BTIG in London in the last few months. Dziedziech joins BTIG from Jefferies, Jastrow joins from Blantyre Capital, Postyn joins from Société Généralé and Summan joins from Goldenberg Hehmeyer.

Leadenhall Capital Partners has appointed Phil Kane as senior credit officer, based in London and responsible for credit management and structuring. He was previously senior advisor at Alantra, responsible for Greek NPL securitisation advisory projects, and has also worked at Deutsche Bank, Cantor Fitzgerald and ICAP.

Liquidation call
Clear Harbor Asset Management, a significant stockholder of Garrison Capital, has delivered a letter to the latter’s board expressing its concerns with the company's persistent underperformance. Despite considerable effort to work constructively with Garrison to address these concerns, the board has failed to take substantive steps to improve performance and refuses to hold management accountable for its repeated failures, according to Clear Harbor. Since 2015, book value per share has fallen from US$13.98 to US$10.30 and Garrison has failed to cover its dividend payments from operating income. The letter states that the logical path for Garrison is an orderly liquidation, with a highly qualified independent investment advisor appointed to oversee this process.  

Liquidity covenant breach
Funding Circle’s Small Business Origination Loan Trust 2018-1 SME securitisation has breached its liquidity covenant, with the burn rate above the amount permitted by approximately 20%. The issuer notes that the liquidity covenant did not contemplate future capital increases of the servicing and collection agent's parent company or the subsequent use of corporate cash in the normal course of business for the purposes of funding the asset-backed finance programmes where it is the subordinated lender. Further, compliance with the liquidity covenant is unlikely for at least a year. Accordingly, the issuer intends to seek approval to amend the servicing agreement to remove the liquidity covenant in due course.

Management internalisation
Colony Capital is seeking to explore with Colony Credit Real Estate the possible internalisation of the management of Colony Credit Real Estate and a transfer of Colony Capital’s credit management business to Colony Credit Real Estate. The move may include the internalisation of Colony Capital’s credit management business into Colony Credit Real Estate via cancellation of Colony Credit Real Estate’s management agreement and the possible contribution to Colony Credit Real Estate of the management contracts of some of Colony Capital’s existing direct credit funds. It follows the execution of a strategic plan to bifurcate the company’s assets into a core portfolio - which it plans to grow - and a legacy non-strategic portfolio, which it plans to monetise and reinvest into the core portfolio.