Sector developments and company hires

Senators seek TALF expansion
US Senators Jerry Moran, Martha McSally and Thom Tillis sent a letter to Fed chairman Jerome Powell and Treasury secretary Steve Mnuchin requesting that TALF be expanded to accept ABS backed by assets from all essential lending sectors as eligible collateral. The letter specifically urges personal instalment loans and non-agency RMBS be included as eligible collateral to ensure that lenders can continue to provide adequate financing to borrowers. The letter follows similar requests from lawmakers in the House of Representatives urging the Fed to expand TALF to reflect the evolution of the securitisation market over the past decade (SCI 3 April).

Model input errors corrected
Moody's has downgraded from A1 to A3 the rating of the class E notes issued by Pepper Residential Securities Trust No. 17, following the correction of model input errors. During past surveillance rating actions, Moody's reports that it incorrectly modelled the step-down conditions for pro-rata principal amortisation. The call option date sub-trigger was incorrectly set up, such that the pro-rata conditions would never be satisfied and the principal waterfall would always be fully sequential. Other model input errors that have been corrected but which haven’t had a rating impact are in connection with a different pro-rata principal amortisation condition and the yield enhancement ledger.