Sector developments and company hires

Dark fibre first
Summit Issuer Series 2020-1, the first securitisation backed by dark fibre communication infrastructure assets, is being marketed by Barclays on behalf of sponsor and manager Summit Infrastructure Group (SummitIG). The deal comprises four classes of notes: US$50m (notional maximum) A1 VFN, US$122.7m A2, US$18.9m B and US$33.6m C.

SummitIG is able to draw on the Class A1 variable funding notes up to the maximum amount to add additional dark fibre assets or networks, as well as for general corporate purposes, provided certain criteria and tests are met. However, the tranche’s outstanding principal balance on the closing date (expected to be 31 December 2020) will be zero, as the issuer anticipates that it will not have the ability to make a draw on the notes at that time due to its inability to satisfy the leverage ratio required. Interest payments on the class C notes will be fully subordinated to principal payments on the class A and B notes when the notes are amortising, except after an event of default.

The assets backing the ABS consist of a dark fibre network primarily located in Northern Virginia (NoVA); related leases and licenses; dark fibre underlying rights agreements; and certain equipment. SummitIG is currently the largest owner and operator of a dark fibre network in the NoVA regional area, the world’s largest data centre hub.

In other news…

Acquisition
Ziegler Capital Management has acquired a minority stake in GIA Partners. Based in New York City, GIA Partners is an asset manager focused on fixed income and credit strategies, with over US$2.4bn in assets under management in separately managed accounts as of 24 November. Eduardo Cortes leads its portfolio management team, which will continue to manage all of GIA’s strategies.

APAC
Equity Trustees has strengthened its corporate trust and securitisation team with the recruitment of Pei Cai Pan, who will be based in Sydney as a manager in the middle office team. He has more than 10 years of experience in securitisation and structured finance, most recently as a vp and client services manager with the Bank of New York Mellon.  

Euro CLO RWNs resolved
Fitch says that it resolved its negative rating watch on 47 European CLO tranches in November. All these tranches were affirmed and assigned a negative outlook.

The total number of Fitch European CLO downgrades since the beginning of the pandemic remains stable at 41, while the number of tranches on negative watch fell to 11. “A large majority of sub-investment-grade CLO ratings are now on negative outlook, reflecting the risk of credit deterioration over the medium term, due to the economic fallout from the pandemic,” the agency says.

Green ABS treatment weighed
The EU Securitisation Regulation is unlikely to incorporate beneficial bank capital treatment for green securitisation holdings until the EBA has completed a similar analysis of the bank prudential framework, Fitch suggests. This may not happen until June 2025, although the agency believes that the EBA may accelerate its timetable to support the ambitious transition to a sustainable economy envisaged under the European Green Deal.

From Fitch's structured finance rating perspective, detailed data and disclosures - ideally based on a harmonised regime - are key for any credit analysis of green assets. Historical and loan-by-loan level data showing any differences in collateral and borrower quality would be needed to assess the relative performance of green and non-green assets.

Article 501c of the CRR mandates the EBA to assess prudential treatment for assets associated substantially with environmental and/or social objectives. Amendments to the EU Securitisation Regulation proposed in the European Parliament on 10 November call for the EBA to report on the development of a specific framework for sustainable securitisation by 1 November 2021.

This report would assess: the introduction of sustainability factors; the implementation of proportionate disclosure and due diligence requirements; the content, methods and presentation of information on negative ESG-related impacts; and any potential effects on financial stability, the development of the EU securitisation market and banks' lending capacity - and hence whether preferential capital treatment could be justified for green securitisations. However, Fitch notes that there is no guarantee that the Parliamentarians' request will make it into the final amendments to the Securitisation Regulation.

Merger under discussion
Owl Rock Capital Group and Dyal Capital Partners have disclosed that they are in discussions regarding a potential strategic combination. The founders of Owl Rock and Dyal would lead the stand-alone firm, with the investment teams and processes remaining unchanged.

The Owl Rock and Dyal founders, alongside Dyal’s parent Neuberger Berman Group, would own meaningful positions in the combined business. The parties have signed a non-binding letter of intent and are engaged in exclusive negotiations with Altimar Acquisition Corporation, a special purpose acquisition company, to facilitate the potential combination.

North America
Marina Meyers has joined Polar Asset Management Partners as strategy lead, head of global credit, based in New York. She was previously portfolio manager and head of fundamental relative value credit at Citadel. Prior to that, Meyers worked at BlueMountain Capital Management, Bridgewater Associates and McKinsey & Co.

Allison Adornato has joined Wingspire Capital as md and national head of underwriting, overseeing the underwriting of asset-based lending (ABL) products. These products range from US$20m to US$200m in transaction size and include revolving lines of credit, fixed asset term loans and cashflow stretch term loans. Adornato joins from Garrison Investment Group, where she was md and underwriting manager with a focus on direct lending.

Open market operation due
The New York Fed is undertaking a small value agency MBS sale open market operation on 10 December. The total current face value of sales in the operation will not exceed US$90m.