Sector developments and company hires

Brit PCC in 144A cat bond first
Brit has printed its debut catastrophe bond, dubbed Sussex Capital UK PCC (Series 2020-1). The issuance marks the first time a protected cell of a UK domiciled multi-arrangement risk transformation vehicle has issued a 144A ILS.

The transaction will provide US$300m of multi-year named storm and earthquake protection for a risk period of four years to 31 December 2024. Structured on an annual aggregate state weighted basis, the proceeds from the bond will be used to collateralise a reinsurance agreement with Brit Syndicates, acting on behalf of its Lloyd’s syndicate 2987.

The bond received a strong response from the ILS investor community, which enabled Brit to upsize the transaction and build a strong panel of investors. GC Securities acted as sole structuring agent and bookrunner on the deal.

In other news…

Asian private debt fund closed
CLSA Capital Partners has closed its first secured private debt strategy - the Lending Ark Asia Secured Private Debt Fund. The commingled fund has capital commitments of US$226m from international limited partners, of which over 82% is currently invested. Together with the fund, the firm’s secured private debt investment strategy platform manages a total of US$626m, including target allocations from separately managed accounts established in conjunction with the fund.

Managed by Lending Ark Asia Secured Private Debt Holdings - a joint venture between Lending Ark Capital’s principals Gregory Park and Carol Lee Park and CLSA Capital Partners - the fund invests in high-quality private debt opportunities across the Asia-Pacific region, including senior and mezzanine tranches of ABS and CLOs. The fund distributes quarterly US dollar current income.

The fund’s revolving senior and mezzanine notes have been assigned a credit rating of single-A and triple-B respectively by Egan-Jones.

EMEA
Alter Domus has appointed Tim Houghton coo and a member of its group executive board, based in Luxembourg. Houghton was previously the firm’s head of core products and group operations. He has over 25 years of experience in structured finance, having also worked at Cortland Capital Market Services, LaSalle Global Securities and Trust Services and ABN AMRO.

Opinion published on IRB amendments
The EBA has published an opinion on the amendments proposed by the European Commission in connection with the EBA’s final draft RTS specifying the methodology competent authorities should follow when assessing institutions’ compliance with the requirements to use the internal ratings-based (IRB) approach laid down in the CRR. The EBA says it has identified a number of substantive changes in the Commission’s version of the RTS, compared to the final draft RTS submitted in July 2016.

The most important change is related to the flexibility for competent authorities to apply any other tests and verifications when assessing institutions’ compliance with the IRB approach. The EBA says it is particularly concerned about these amendments, as they could potentially hamper supervisory efforts to ensure harmonised use of IRB models.

Other substantive changes identified by the EBA relate to the assessment of the institutions’ validation of internal models, approaches towards grade assignment and risk parameter estimation, as well as any governance and procedural aspects required in the context of the IRB approach.