Sector developments and company hires

More Euro CLOs on review
Moody’s has put a further 234 tranches from 77 European BSL CLOs on review for possible downgrade. The securities involved are rated Baa2 to B1 and below. The action brings the total number of European CLOs Moody’s has under negative review to 351, representing around 16% by count, or 6.5% by balance, of its rated European BSL CLO tranches outstanding.

Moody’s explains: “Since April, the decline in corporate credit has resulted in a significant number of downgrades among the assets underlying some CLOs. Consequently, the weighted average default risk of these CLO portfolios has increased substantially and the credit protection available to the CLO securities has eroded, prompting Moody's to place additional securities on review for possible downgrade.”

In other news…

CRE data integration
Trepp has implemented a new data integration with CompStak, a provider of commercial real estate lease comps, sales comps and property information. Trepp clients will now be able to view CompStak's critical market and submarket leasing metrics, while mutual clients of both firms can access CompStak's detailed property and space level data. As part of the integration, Trepp and CompStak have released an initial report combining Trepp's CMBS data and CompStak's lease comp data in New York City to examine the underlying income risk on commercial real estate properties over the next two years. The analysis reviewed more than 120 properties revealing that nearly US$750m in loan balance is at refinance risk due to upcoming renewal and maturity concerns.

DSB asset sales postponed
Due to the Covid-19 pandemic, the bankruptcy trustees of DSB Bank have decided to postpone the sale of the remaining assets of the bank’s securitisation programmes until further notice. Because of this temporary postponement, DSB Bank does not intend to make a bid in the near future for the receivables portfolios of the Monastery 2004-I and 2006-I and Dome 2006-I SPVs. The bank notes that some noteholders are considering selling their notes issued by the SPVs and it is prepared to consider purchasing the Monastery 2004-I class B to class E notes and the Monastery 2006-I class B to class D notes if holders wish to sell them at below par.

EMEA
Brit has appointed Michael Wade as an independent strategic consultant. In this role, Wade will act as an adviser to Brit’s management team across a number of areas, while also acting as an external ambassador for the group. He brings over 40 years of experience in the insurance market, during which time he has held a series of high-profile positions, including advising the UK government on the Pool Re and Flood Re projects. He is currently non-executive chairman at TigerRisk Capital Markets & Advisory, the senior non-executive director of Neon Underwriting and a senior adviser to Swiss Re.

Ocorian has appointed Nick Bland as director and head of UK client services in London. Bland will manage a team responsible for client service delivery to corporate and institutional clients, private clients, alternative investment funds and corporate trust clients. He previously managed Deutsche Bank’s EMEA structured credit services group within the corporate trust division and was responsible for CLO/CDO, private debt, loan and hybrid transaction servicing.

Interest-free restructuring ‘credit negative’
Obvion is offering borrowers who took advantage of coronavirus-related payment holidays the option to convert their total deferred principal and interest payments into a new and interest-free loan part that will be added to the existing loan. Repayment of this added loan part would begin two years after the restructuring via equal monthly instalments over three years. The deferred payments would therefore begin repayment in 2022 (instead of the first half of 2020) and bear no interest until repaid within five years in 2025. Moody’s notes that Obvion's payment solution is in line with the plans of other Dutch lenders that will likely take similar steps. The agency suggests that if interest-free restructuring emerges as the common solution to payment holidays stemming from the coronavirus crisis, the cashflows of Dutch RMBS would be reduced in a prolonged crisis with a severe recession, a credit negative.

Margin call settlement
AG Mortgage Investment Trust has entered into a settlement agreement with RBC pursuant to which they mutually released each other from further claims related to a financing agreement that the latter alleged the former had defaulted on at the height of the Covid-19 shock. As part of the settlement, AG paid RBC US$5m in cash and issued to RBC a secured promissory note in the principal amount of US$2m. AG REIT Management, the company’s external manager, simultaneously entered into a separate intercreditor and subordination agreement with RBC that subordinates the payment of the company’s previously issued US$20m secured promissory note payable to the manager to the note payable to RBC. AG had disputed RBC’s notices of events of default and filed a suit in federal district court in New York, seeking both to enjoin RBC from selling the company’s collateral securing the financing, as well as damages.