Sector developments and company hires

APAC ESG expansion eyed
Moody’s is set to expand its Singapore office with the aim of spearheading ESG, climate and sustainable finance efforts in the Asia Pacific region, as well as fostering the ESG ecosystem in Singapore. Included in the firm’s plans are several initiatives, such as the establishment of an ESG Centre of Excellence for investor outreach, engagement and training, and an innovation lab and technology accelerator that will partner with local fintech companies in developing ESG analytical solutions and assessment tools. These initiatives will, over time, complement the new Moody’s ESG solutions group office established in Singapore in February to support the growth of sustainable finance across APAC.

Separately, Moody's will include climate risk scores - as developed by Four Twenty Seven - as an appendix to presale and new issue reports for US and European RMBS. Climate risk levels will be disclosed for the transaction as a whole, as well as for the US counties and European regions showing the highest concentrations of mortgage loans in each pool.

APAC promotion
Crédit Agricole has named Edouard O’Neill as ceo for the Hong Kong branch and head of structured finance for Asia. O’Neill will lead the overall business development and strategy of the bank’s commercial franchise in Hong Kong and further develop the organisation’s structured finance activities in Asia.

Located in Hong Kong, O’Neill reports to Michel Roy, senior regional officer for Asia-Pacific. For structured finance Asia-related matters, he reports dually to Jacques de Villaines, global head of structured finance and Roy. He was previously md, global head of acquisition finance and advisory at the bank.

CLO data tie-up
Reorg and Moody’s Analytics have entered into a data-sharing agreement. Reorg will supply subscribers of Moody's Analytics structured finance solutions with real-time notifications of credit events from its intelligence platform in exchange for Moody's Analytics data on CLO portfolio holdings and collateral. The latter’s CLO data covers US$872bn in total CLO assets.

Spike in CMBS default rate
The US CMBS cumulative default rate hit a new high of 18.2% last year, exceeding the prior peak of 16.8% in 2013, according to Fitch’s latest loan default study for the sector. The total annual default rate for 2020 was 3.3%, up from 0.3% in 2019, due to a spike in term defaults - which accounted for approximately 95.9% of total defaults. The increase in the cumulative default rate was also influenced by the sharp decline in new issuance.

Retail and hotel defaults each represented 43.5% of total defaults. A total of 374 retail loans (US$12.9bn) defaulted in 2020, compared with 64 loans in 2019. Regional malls constituted 54.4% of retail defaults and 11 of the 15-largest overall defaults.

The hotel sector saw defaults increase substantially to 613 loans (US$12.9bn) from 31 (US$388.3m) in 2019. Moderate recoveries are expected in the coming year as travel increases with greater immunisation rates.

The overall default rate would have been higher if not for servicers’ willingness to work with borrowers to grant relief. The vast of majority of the 555 loans granted consent agreements received payment forbearance.

SR final assessments underway
ESMA has reached the last stage in the assessment process of applications received from securitisation repositories (SRs) under the Securitisation Regulation (SECR). The obligation to report securitisation transactions to an SR under the SECR will apply as soon as one SR is formally registered and ESMA will inform market participants when the registration of the first SR is completed. The authority has 40 working days in which to finalise its assessment of a registration and, if favourable, the entity will be registered as an SR five working days after the registration decision is adopted.