Sector developments and company hires

Chip shortages ‘credit positive’ for auto ABS
Sizable auto production cuts due to semiconductor shortages in the US will provide support for used vehicle values, a credit positive for securitisations and captive auto finance companies, according to Moody’s. The rating agency notes that such shortages – which are expected to last at least into next quarter - could result in North American production falling by 300,000 vehicles or more this year, at a time when dealer inventories are already low. Higher used vehicle values will aid ABS collateral performance and lower deal risks.

Moody’s suggests that transactions poised to benefit from the production slowdown include auto loan and lease, rental car, fleet lease and auto floorplan ABS. Meanwhile, vehicle dispositions from Hertz Vehicle Financing II - which is winding down after its sponsor's bankruptcy (SCI passim) - could slow as a result of the more limited availability of new vehicles to add to the company's fleet.

Chip shortage benefits for ABS and lenders will likely be temporary and modest. “The chip supply situation remains highly fluid, with General Motors Company, Ford Motor Company and other manufacturers taking a range of actions to mitigate the negative effects. In addition, chip manufacturers are aggressively moving to ramp up production. Consumer preferences and the larger size of the used vehicle market than the new vehicle market will also limit the effects,” Moody’s observes.

Fed’s agency CMBS purchases to end
The New York Fed’s Open Market Trading Desk says it will no longer conduct regular operations to purchase agency CMBS at the conclusion of the current schedule, in light of the sustained smooth functioning of the markets. As such, the agency CMBS purchase operation currently scheduled for 23 March is expected to be the last regularly-scheduled purchase operation. However, consistent with the most recent FOMC directive, the desk remains ready to conduct agency CMBS purchase operations as needed.

North America
Scott Bommer has joined Blackstone as cio of the new Blackstone Horizon platform, an initiative being launched by Blackstone Alternative Asset Management (BAAM). He joins Blackstone after managing his family office, having founded SAB Capital Management.

Blackstone Horizon is a new investment business that targets strong absolute returns by investing in and forming strategic partnerships with high-performing investment managers. Bommer will work with BAAM senior management on asset allocation, risk-management, stakes/seeding investing and other strategic initiatives.

PIMCO has promoted a number of its staff to the position of md, including two professionals with securitisation experience. Harin de Silva is a portfolio manager in the firm’s New York office and is responsible for sourcing, underwriting and managing opportunistic specialty finance investments in the US. Prior to joining PIMCO in 2009, he was an md at Merrill Lynch with a focus on structured credit, having previously worked at Credit Suisse and Prudential Securities, focusing on structured finance.

Jason Mandinach is head of alternative credit and private strategies within PIMCO’s product strategy group, based in the Newport Beach office. Prior to joining the firm in 2010, he worked in business development for the Chicago Climate Futures Exchange, having previously been a vp on the agency CMO desk at Bear Stearns.