Sector developments and company hires

Ares facility inked
Non-Standard Finance (NSF) has entered into a new six-year securitisation facility totalling £200m, at pricing that is more favourable than its existing facility and is expected to result in a pre-tax saving of approximately £1m in the year ended 31 December 2020. On satisfaction of certain conditions, the new facility – which is provided by credit funds managed by Ares Management Corporation – will be available to fund continued loan book growth for the group's fast-growing branch-based and guarantor loans divisions. It is also expected that the facility will be used to repay a proportion of the current outstanding debt under the company's existing drawn credit facilities.

Blockchain ABS completed
Figure Technologies has issued the first-ever securitisation backed by loans originated, serviced, financed and sold on blockchain via a platform dubbed Provenance. The collective benefit of blockchain to the parties over the lifecycle of the securitised loans totaled over 100bp. Parties in the transaction included Figure (the originator), Jefferies Group (structuring agent, lead underwriter and warehouse provider), Nomura (lead underwriter), Tilden Park Capital (loan contributor and subordinated note buyer) and a large asset manager (senior note buyer). Provenance is designed to create a more accessible ABS market, where smaller issuers may securitise assets at a lower cost than the traditional model.

Containment risk ranked
The asset performance of almost 90% of structured finance (SF) transactions globally have high or moderate vulnerability to disruptions as a result of the coronavirus and containment efforts, according to a Fitch report. The report categorises each sector's asset performance vulnerability as high, moderate or low to the effects of a temporary coronavirus disruption scenario, including travel restrictions, business and school closures, and a moratorium on large gatherings in major metropolitan areas in all countries around the globe.

Fitch assigns a high asset performance vulnerability assessment to the assets underlying SF transactions in China, Italy and South Korea. The high assessment also applies globally to aircraft ABS and CMBS loans secured by hotel and retail properties.

The remaining Fitch-rated SF transactions are ranked as having moderate or low asset performance vulnerability. “Most transactions have sufficient liquidity provisions in place that can support timely interest payments despite higher arrears and lower cash flow due to the temporary disruption,” the agency says.

Fitch assumes for this risk ranking exercise that the disruptions will last one to three months, and that servicers and governments are likely to provide temporary payment relief to borrowers. The agency says it recognises the growing risk of a more severe and sustained scenario and is currently analysing the asset performance and rating implications of more protracted scenarios.