Sector developments and company hires

Early upgrade
DBRS Morningstar has taken the unusual step of upgrading from double-B (low) to double-B the class E notes issued by Autonoria Spain 2019 a week after the transaction priced (SCI 2 December). The move follows the final pricing of the coupons on the notes and the three interest rate swaps, which resulted in an overall reduction in costs to the transaction of approximately 0.4%, compared with the initial assumptions used within the rating agency’s cashflow analysis at the time of assigning the provisional ratings.

Eminent domain clarification
Freddie Mac has clarified its multifamily loan documents to address investor concerns on the non-traditional use of eminent domain to preserve rental affordability (SCI 14 October). The documents will continue to provide for prepayment relief when a traditional condemnation proceeding is undertaken by a governmental agency, but the clarification specifies that the GSE will continue the historical treatment of not requiring a prepayment premium in connection with traditional exercise of the power of eminent domain. It also ensures compliance with applicable laws and uninterrupted provision of cost-competitive and reliable liquidity to the multifamily housing market. The revisions will be effective as of 1 January, apart from those located in King County, Washington, which will incorporate the clarification immediately.

ILS fund launched
Brit has launched Sussex Specialty Insurance Fund (SIF), which offers institutional investors direct access to Lloyd’s-underwritten specialty insurance and reinsurance through an ILS fund structure. The fund will access a diversified basket of risks from across the Lloyd’s market by providing capital to support Syndicate 2988, Brit’s third-party capital-backed syndicate, which is moving into its fourth year of operation. Syndicate 2988 has nearly US$200m of stamp capacity for 2020 and writes business alongside Brit’s main syndicate. The SIF will sit as part of Brit’s Sussex Capital ILS platform.

Turbo amortisation
The recent OCP Euro 2017-1 reset is noteworthy for a turbo amortisation feature, whereby part of the remaining equity cashflows are diverted to amortise the single-B rated class F principal. BofA Global Research notes that the aim is to reduce the tranche WAL as a means of lowering its funding cost and facilitate its placement. The tranche printed on 2 December with a tight DM of three-month Euribor plus 935bp.