Sector developments and company hires

ReoCo restructuring in the works
The Leviticus SPV issuer is set to implement a ReoCo structure, having appointed Credito Fondiario as the servicer to carry out all core ReoCo activities. The main purpose of the ReoCo is to encourage third-party acquisitions at auctions above auction base prices or to repossess real estate assets at otherwise empty auctions and re-sell them at better prices in the open market.

Based on the draft documentation, ReoCo structural fees and costs will rank senior to the repayment of assumed debt towards the issuer, meaning that the benefit of the ReoCo implementation will largely depend on the ability of the servicer to sell purchased properties at higher prices than would have been realised at auctions. The overall amount of debt assumed by the ReoCo will be limited to €100m on a revolving basis. Funding of such activities is expected to be through limited-recourse financing provided by Credito Fondiario or the holders of the class B and J notes issued by the NPL ABS.

Scope notes that the introduction of a ReoCo, if implemented based on the draft documentation made available to it, would not impact the current ratings of the class A notes.

In other news…

CLO manager adds London office
Palmer Square Capital Management is expanding its investment platform internationally with the addition of a new office and two credit analysts in London. Coupled with its team’s substantial global credit experience, Palmer Square sees an opportunity to leverage its static and reinvestment US CLO platform in Europe, as well as to invest across European credit broadly, both on a long and short basis.

The firm began planning its London expansion in 2015, with the hiring of its first investment professional focused on European credit markets. Over time, the firm has added other senior investment professionals with significant experience investing in European credit. It now plans to methodically scale personnel and resources in the region.

Digital programme initiated
Ginnie Mae has begun to implement the policy, technology and operational capabilities necessary to accept electronic promissory notes and other digitised loan files as collateral for Ginnie Mae securities. As part of this initial phase, issuers may apply to participate as ‘eIssuers’ and begin securitising government-backed mortgages comprised of digital collateral with Ginnie Mae approval.

Ginnie Mae will begin reviewing applications on a rolling basis beginning on 20 July. If approved, eIssuers and their eCustodian will need to complete a series of test eNote transactions with Ginnie Mae and, upon successful completion, Ginnie Mae will grant written eMortgage Issuance Authority. This will govern and limit the number of eMortgages that may be securitised by that eIssuer during the initial phase of the digital collateral programme.

HBI acquisition agreed
Bain Capital Credit has completed the acquisition of former Hypo Alpe Adria Bank from the Austrian government, which was the owner through the vehicle HBI-Bundesholding. The acquisition strengthens Bain Capital Credit’s strategic presence in the Italian non-performing loan sector.

In the acquisition framework, the Friuli-based company will change both its name and vocation to deal with the servicing management of third-party NPL portfolios, becoming Julia Portfolio Solutions. Previously, the firm operated in the banking sector, but over recent years has shifted focus to credit and real estate portfolio management.

Julia Portfolio Solutions’ senior management will be led by Alfredo Balzotti as chairman and Federico Di Berardino as general manager. Balzotti is md and general manager of Aquileia Capital Services, the Italian NPL platform of Bain Capital Credit. Di Berardino joined Hypo Alpe Adria Bank at end-2013 and since then has coordinated the company's overall activities in all areas of credit, as well as in legal and regulatory affairs, most recently as deputy general manager.

With approximately 75 employees and an initial portfolio under management of about €400m, Julia Portfolio Solutions will focus on the corporate sector; in particular, real estate leasing.

New appointments

Schulte Roth & Zabel has added Andrea Mandell as a partner in its tax group and Paula-Marie O’Brien as a partner in its finance and derivatives group. Mandell is based in the firm’s New York office, where she advises on the tax aspects relating to structured finance, securitisation and fund formation. She joins from Dentons, where she was a partner in the capital markets and tax practices.

O’Brien is based in SRZ’s London office, where she focuses on specialty finance, including structured products, trading of distressed debt, loan portfolio acquisitions, forward flow transactions and direct lending. She was previously a finance partner at Jones Day.

RFC on derivatives RTS
The EBA has launched a consultation on draft regulatory technical standards specifying how institutions should determine exposures arising from derivative and credit derivative contracts not entered directly into with a client but whose underlying debt or equity instrument was issued by a client. These draft RTS aim to ensure appropriate levels of consistency through different pieces of the regulatory framework for the calculation of exposures for large exposure purposes. In addition, the draft RTS provide a separate methodology for the calculation of exposures stemming from contracts with multiple underlying reference names.

As part of the risk reduction measures package adopted by European legislators, the large exposure framework was updated to ensure greater alignment with the Basel standard. The consultation runs until 23 October and a public hearing will take place on 6 October. 

‘True lender’ rule proposed
The OCC has proposed a rule that would determine when a national bank or federal savings association makes a loan and is the ‘true lender’ in the context of a partnership between a bank and a third party. The proposed rule would resolve uncertainty by specifying that a bank makes a loan and is the true lender if, as of the date of origination, either it is named as the lender in the loan agreement or funds the loan. The deadline for comments on the rule is 3 September.