Sector developments and company hires

Azimut expands

Italian asset manager Azimut has established a US-based operation named Azimut Alternative Capital Partners (AACP), with the purpose of investing in GP stakes of alternative managers specialised in the private markets space. Concurrently, it signed an investment and shareholder agreement with AACP’s new ceo Jeffry Brown to execute a 10-year business plan, which aims to build a leading private markets strategic permanent capital solutions provider and business operator. AACP’s focus is on the underserved segment of sub-US$3bn AUM alternative asset management businesses and it anticipates an investment of capital sufficient to achieve over US$7bn of pro-rata AUM, as well as the entrance of further key senior managers over time. Brown has over two decades of investing, due diligence and operating management experience in the alternatives asset management industry. He was previously an md at Dyal Capital Partners and, before that, worked at Bear Stearns Asset Management and Morgan Stanley Asset Management.

Credit firm bulks up

Monroe Capital has expanded its opportunistic private credit team with the addition of four new hires: Jason Starr, md, responsible for sourcing, underwriting, conducting due diligence, negotiating legal documents and managing opportunistic real estate credit investments, Darrick Ginkel, md, responsible for originating, analysing, evaluating and managing opportunistic private credit investments, Joseph Valickus director in the New York office, responsible for originating, evaluating, underwriting and managing opportunistic private credit and equity investments across multiple industries, including specialty finance, corporate loans, secondaries, and real estate and Chris Spanel, avp, in the Chicago office, is responsible for analysing, evaluating and managing opportunistic private credit investments across multiple industries, including specialty finance, corporate loans, secondaries, and real estate.

DFHL default

Moody's notes that the general operational practice among banks in the Indian ABS market to require the consent of the sponsor before cash reserves are released to trustees is credit negative, because it significantly increases the risk of immediate default for ABS deals upon the sponsor's default. A number of Indian RMBS issued by Dewan Housing Finance Limited (DFHL) defaulted last month because the cash collateral bank required DHFL's consent before it could release cash to the trustee. As the sponsor did not provide the consent, the trustee could not access cash reserves in time to make payments to investors. Following the DHFL default, sponsors and trustees have been working with cash collateral banks to provide the trustee unhindered access to cash reserves, which are held in trust for the securitisations. The lien over the bank accounts holding the cash reserves is also in favour of the trustees.

Fallback language adopted

Fannie Mae and Freddie Mac has announced that they will use the ARRC’s recommended fallback language for new USD denominated closed-end, residential adjustable-rate mortgages (ARMs) and plan to publish updates to their uniform ARM notes in the first quarter of 2020. Simultaneously, the ARRC has released recommended contractual fallback language for new USD denominated closed-end, residential adjustable-rate mortgages (ARMs). These provisions are for market participants’ voluntary use in new residential ARMs that reference USD LIBOR, and were developed with the goal of reducing the risk of serious market disruption in the event that LIBOR is no longer available. The recommendations provide clear language that would replace USD LIBOR with a spread-adjusted index based on SOFR which had been recommended by the ARRC for consumer products.

Mortgage ILS priced

Genworth has priced its first mortgage ILS – Triangle Re or TMIR 2019-1. The deal’s $135m 1.6 year wal M1 notes printed at plus 190bp; the $151m, 3.8 year M2s at plus290bp and $17m 5.2 year B1s at plus 415bp. This means that all six major US mortgage insurers have now entered the credit risk transfer market via securitisation structures.

RFC on interest rule

The FDIC and OCC are soliciting comments on a proposed rule to clarify that when a national bank or savings association sells, assigns or otherwise transfers a loan, interest permissible prior to the transfer continues to be permissible following the transfer. This proposal aims to address confusion about the effect of a transfer on a loan’s valid interest rate, including confusion resulting from the recent Madden versus Midland Funding decision by the US Court of Appeals for the Second Circuit. Comments will be accepted for 60 days after publication in the Federal Register.