Sector developments and company hires

NCSLT consent judgment denied
Fitch has affirmed 37 notes and maintained its rating watch negative placement on nine notes from 12 National Collegiate Student Loan Trust (NCSLT) securitisations. The move follows Delaware District Judge Maryellen Norieka’s decision last month not to approve a consent judgment proposed by the CFPB and purportedly agreed to by the NCSLTs.

The judgment was intended to address alleged violations - including illegal student loan debt collection - by the NCSLTs of the Consumer Financial Protection Act of 2010. The CFPB has until 19 June to respond to a motion to dismiss filed by Transworld Systems, the subservicer and debt collector for the affected transactions.

The proposed judgment requires an independent audit of all student loans in the NCSLT portfolios. Collections on any student loans identified by the audit to lack proper documentation or for which the statute of limitations has expired on the debt collection would have to cease.

If the proposed judgment is confirmed, it may result in the NCSLTs making an aggregate payment of at least US$19.1m, due within 10 days of the effective date of the judgment. Fitch notes that should this result in a lump sum, one-time senior liability, it may impair the ability of some of the trusts to pay senior interest in a timely fashion, thereby resulting in an EOD for the notes. If instead the payment is distributed over time, it will reduce the cash available to repay noteholders and thereby reduce the available protection.

Considering that the action remains outstanding, Fitch is maintaining the triple-B rating cap for these transactions and the RWN on all notes with ratings of single-B or above.

In other news…

Mariner MBO agreed
ORIX Corporation USA has agreed to sell Mariner Investment Group to Mariner chairman and ceo Curtis Arledge, Mariner founder, partner and co-cio William Michaelcheck and other senior members of the firm. The transaction aligns with ORIX USA’s objective to consolidate its investment capital and asset management strategy in the US, with a focus on alternative assets.

As part of the transaction, ORIX USA will retain Mariner’s leveraged credit business, co-led by David Martin and Erik Gunnerson. As of 31 March, the team had approximately US$4.6bn of assets under management across eight CLOs and multiple separately managed accounts.

ORIX USA says it has made significant investments in the leveraged credit business and this transaction will enable it to “continue taking advantage of opportunities in broadly syndicated loans and CLOs”. The firm will use an existing affiliated registered investment adviser to house the leveraged credit business, as well as other potential asset management strategies in the future.

Art Mbanefo, senior md, cio and head of principal business of ORIX USA, has assumed Arledge’s role as head of ORIX USA’s asset management business.

After closing, the Mariner business will be 100% employee-owned and continue to operate under the Mariner name. As an independent company, Mariner will continue to provide its investors with fixed income relative value and credit strategies in the public and private markets.