Sector developments and company hires

Landmark Pan-Asian ILS launched
MS Amlin Underwriting has launched Phoenix 1 Re, the first locally issued ILS to provide capacity to a local cedant, solely focused on the Pan-Asia region. The special purpose reinsurance vehicle (SPRV) is domiciled in Singapore and provides US$42m of collateralised capacity to support MS Amlin Syndicate 2001’s Asia reinsurance portfolio through its Singapore-based underwriting platform.
Phoenix 1 Re has a unique structure that accommodates different policy renewal and inception dates within its underlying portfolio of Asian risks, thereby making it attractive to a wider pool of catastrophe bond investors. The portfolio has exposure to over 10 territories and specifically excludes key peak perils. Approximately half of the capacity was supported by Asia-based investors or fund managers.

In other news…

Acquisitions
Onex Corporation has acquired Falcon Investment Advisors, with the aim of expanding its credit platform and solidifying its market position in tradeable, opportunistic and private credit. Falcon provides private credit financing solutions and has US$3.8bn of assets under management, as of 30 September 2020. It employs an opportunistic approach to mezzanine and other direct lending investments for US middle market companies. With this transaction, Onex Credit will have over US$16bn of alternative credit assets under management.
Falcon’s senior management team and employees are all joining the new platform within Onex Credit, called ‘Onex Falcon’. Current members of the Falcon investment team will continue to be responsible for the investments of existing and future funds, with the support of the Onex Credit platform and team.
Falcon founder and managing partner Sandeep Alva and Onex Credit md Blair Fleming will be co-business heads, reporting to Jason New, co-ceo of Onex Credit. Together, they will drive execution and strategy for the combined team.

US Bank is set to purchase the debt servicing and securities custody services client portfolio of MUFG Union Bank. Under the terms of the agreement, US Bank will acquire approximately 600 client relationships and US$320bn in assets under custody and administration. The deal is expected to close in 1Q21, subject to regulatory approval and satisfaction of customary closing conditions.

Call to transition legacy ABS
AFME has called on market participants to actively transition as many transactions as possible to identify and reduce the stock of legacy securitisations well in advance of the cessation of Libor at end-2021. The association urges issuers and investors to contact each other via established channels, in order to identify and implement the required practical next steps for the affected bonds.
While draft legislation has been laid before UK Parliament to assist in the resolution of “tough legacy” transactions, the UK authorities have made clear that parties relying on regulatory action will not have control over the economic terms of that action. The FCA has further pointed out that although it may be given the powers to facilitate the development of a ‘synthetic’ Libor, it will not be bound to use such powers.

CMBS ARAs reviewed
KBRA recently reviewed appraisal reduction amounts (ARAs) across the US CMBS 2.0 conduit universe and found that 409 ARAs were effectuated year-to-date through November 2020, versus 111 in full-year 2019. Excluding automatic ARAs, more than 80% of realised losses exceeded the ARAs initially effectuated.
Of the US$3.1bn of ARAs outstanding across 442 loans, more than three-quarters by principal balance are collateralised by retail (54%) and lodging (24%) assets, according to the KBRA study. By state, New York and Texas have the two largest ARA exposures - at US$566.7m and US$478m respectively - and account for about one-third of all outstanding ARAs. The 10 deals with the highest ARA exposures have cumulative ARA amounts ranging from 6.7% to 16.8% of their outstanding principal balance.

EMEA
The European Leveraged Finance Association (ELFA) has appointed Sabrina Fox as its first ceo. Fox will establish and maintain relationships with strategic partners, engage with regulatory bodies and work with the ELFA’s members to take a leading role on industry issues and advocacy positions in the UK and the EU. Prior to her appointment as ceo, Fox was executive adviser at the ELFA for two years. She joined the ELFA from Covenant Review, where she was head of European high yield research.

Juan Carlos Martorell is now responsible for origination, structuring and distribution of securitisations and risk transfer at Munich Re. He joins Munich Re from Mizuho International, where he was md and co-head of structured products solutions. Prior to that, Martorell worked at Lazard, Amias Berman, ABN AMRO and S&P.

Onex Credit has recruited Conor Daly to lead its European CLO platform, beginning in April 2021. Daly joins Onex Credit from BlackRock, where he was a portfolio manager in the European fundamental credit team. He was a key member of the team that established BlackRock’s European CLO and leveraged loan business.

Harry Noutsos has joined PCS as md within its outreach team. Noutsos was previously global head of ABS at ING and has also worked at Bank of America, Credit Suisse and Santander in securitisation roles.

Rabobank has promoted Serdar Özdemir from executive director to head of structured asset distribution - portfolio management. Based in Utrecht, he is responsible for balance sheet optimisation at the bank via whole loan sales and securitisation. Özdemir joined Rabobank in 2014 as a senior securitisation structurer, having previously worked at RBS and ABN AMRO.

French SME CRT inked
The EIB Group and BNP Paribas have executed a synthetic securitisation to support French SMEs and mid-caps hit by the coronavirus fallout. Supported by the European Fund for Strategic Investments (EFSI), the operation consists of an EIB Group guarantee on an existing portfolio of loans to SMEs and mid-caps. This credit protection enables BNP Paribas to free up part of the regulatory capital allocated to this portfolio and deploy €515m of new loans to SMEs and mid-caps in France over the next two years.
The financing may take the form of bank loans or leasing transactions. The beneficiaries of this financing will have access to favourable financial terms via an onlending deal granted by the EIB.

Global
Cadwalader has promoted seven attorneys to special counsel, including Alexander Collins and Kevin Sholette respectively of the firm’s capital markets and real estate practices. Based in London, Collins focuses on structured finance, with an emphasis on CLOs. Sholette is based in Charlotte and primarily represents financial institutions in connection with the origination of single- and multi-asset complex real estate loans of all balance sizes secured by all asset classes.

HERO ABS ‘insulated’ from Renovate bankruptcy
PACE originator Renovate America last month filed for Chapter 11 bankruptcy, as a result of coronavirus economic disruption, underwriting legislation passed in California in 2018 and lawsuits filed against the company. These regulatory and legal issues include the California legislation implementing strict standards focused on ability-to-pay, making new originations more costly, and a putative class action lawsuit against Renovate.
Renovate has sponsored 13 PACE securitisations under the HERO Funding platform. But KBRA notes that the transactions are largely insulated from the financial performance of Renovate, as the company only served as the programme administrator, has limited interaction with the underlying obligors and has little control over collateral performance. The servicing of the PACE assessments is performed by David Taussig & Associates, which serves as the assessment administrator.
Despite Covid-19 and the challenges faced by Renovate, the PACE ABS rated by KBRA have continued to perform and homeowner delinquency levels have remained below 3%.
Meanwhile, Finance of America Mortgage (FAM) has placed a stalking horse bid for Renovate’s Benji business, which provides home improvement financing solutions.

North America
Simon Mullaly has joined Guggenheim Securities as md, to expand its fixed income credit trading capabilities. Mullaly was previously md and head of the European private credit trading group at Imperial Capital. Prior to that, he was the founder and ceo of Yorvik Partners, a London-based esoteric credit products brokerage that was acquired by Sterne Agee (SCI 11 October 2013).

SR application submitted
European DataWarehouse (EDW) has submitted an application to become a securitisation repository in the UK registered and supervised by the FCA. The move follows its establishment of a UK subsidiary and office. EDW has collected loan-level data and relevant documentation for over 1,600 transactions since inception.