Sector developments and company hires

Interest rate mismatches eyed
Moody’s suggests that loan repricing will increase interest rate mismatches for Chinese structured finance deals, posing a higher risk for RMBS than auto ABS, given the longer loan terms and the greater share of floating-rate loans. All Chinese financial institutions must reprice outstanding floating-rate loans to either loan prime rate (LPR)-indexed floating rates or fixed rates by August 2020. However, most outstanding securitisations have floating coupon rates. The move is also expected to reduce asset yields, as LPRs will likely continue to decline amid the coronavirus outbreak. Additionally, the repricing raises uncertainty for outstanding structured finance deals, as noteholders may need to consent to loan interest rate changes.

In other news…

Corporate services execs named
SANNE has promoted Jason Bingham to the role of chief strategy officer, based in London, and appointed Marta Ciemiega as business development director in New York. Bingham, who already serves on the group’s executive committee, had previously held the post of md of product development. He has been with SANNE since 2012, when he joined as head of real assets, focusing on strategy, business development and product operations. In her new role, Ciemiega will be responsible for building new relationships with fund managers that have investment strategies spanning private equity, real assets, infrastructure, private credit and hedge funds. She joins SANNE from RBC and prior to this held various senior roles at Bloomberg, Fitch Solutions and S&P.

Covid-19 guarantee fund backed
Following a recommendation by the Eurogroup on 9 April, the EIB has backed the creation of a €25bn European Covid-19 guarantee fund, which should enable the bank to increase its support for European companies up to an additional €200bn – with a focus on SMEs. The guarantee fund envisages a contribution from all 27 EU Member States and will also be open to contributions by third parties, for example from the EU budget. It will be established under the EIB’s structure of Partnership Platform for Funds (PPF), based on existing legal frameworks and standardised procedures. The fund will be formally established as soon as Member States accounting for at least 60% of EIB capital have made the necessary commitments.

Specialised lending RTS endorsed
The EBA has published an opinion responding to the European Commission’s intention to amend the EBA’s final draft RTS on assigning risk weights to specialised lending exposures before endorsing them. The EBA states that is of the view that the proposed changes - despite their substantive nature - do not alter the draft RTS in a significant manner, as they still maintain a good balance between the flexibility and risk sensitivity required for the IRB approach and the need for a harmonised regulatory framework. The substantive changes introduced by the Commission: introduce the possibility for institutions to consider a sub-factor as irrelevant for a certain type of specialised lending exposure; allows institutions to consider additional relevant information (an ‘additional risk driver’) for a type of specialised lending exposure, jointly with the sub-factor which most closely corresponds to that additional risk driver; and simplifies the rules on overlapping criteria at the level of the sub-factor.