Sector developments and company hires

NPL secondary market measures agreed
The European Parliament and European Council have agreed on common EU standards regulating the transfer of non-performing loans from banks to secondary buyers while protecting borrowers’ rights. The measures are designed to foster the development of secondary markets for credit agreements originally issued by banks and qualified as non-performing, enabling third parties to purchase such loans across the EU.

Since credit purchasers are not creating new credit but buying existing NPLs at their own risk, they will not need special authorisation but will have to comply with borrower protection rules. However, credit servicers will be required to obtain authorisation and be subject to supervision by the member states’ competent authorities. Member states should also ensure that there is a publicly accessible up-to-date list or a national register of all credit servicers.

In order to protect consumers, all credit purchasers will be obliged to appoint a credit servicer for consumer portfolios. In addition, third country credit purchasers will have to appoint a credit servicer for SME portfolios to protect entrepreneurs.

Further, a uniform level of protection will be introduced for borrowers who cannot pay their debts, requiring credit purchasers and servicers to provide accurate information, protect borrowers’ privacy and refrain from any harassment or undue influence.

In advance of the first debt collection, a borrower will also have the right to be notified in a clear and understandable manner on paper or another durable medium concerning any transfer of a creditor’s rights. The information should include a date of transfer, identification, contact details and authorisation of a new credit servicer, as well as detailed information on the amounts due by the borrower. Additionally, the borrower should be informed where they can submit complaints.

Fees and penalties charged by servicers cannot change, as per the new directive, nor any additional costs be imposed. Furthermore, the contract and obligations between a credit servicer towards a credit purchaser should not be altered by the outsourcing of credit servicing.

Finally, a borrower’s individual circumstances should be taken into account, including mortgages linked to a residential property and their ability to repay a loan. Measures may include partial refinancing of a credit agreement, modifying the terms of the agreement and extending the terms of the loan.

In other news…

Direct lending platform acquired
Sound Point Capital Management has acquired the US direct lending platform of CVC Credit. As part of the agreement, Sound Point has hired a team of nine investment professionals from CVC Credit, who together manage a portfolio of approximately US$1bn of assets.

The nine-person CVC team is led by Tom Newberry, global head of private debt at CVC Credit, and David DeSantis, head of US private debt at CVC Credit. Terms of the transaction were not disclosed.

North America
Andrew Rippert has joined Aspen in the newly created role of evp - head of mortgage, reporting to Christian Dunleavy, chief underwriting officer of Aspen Reinsurance. He will also become a member of the firm’s reinsurance executive committee.

Rippert has over 20 years’ experience in shaping and building global mortgage insurance and reinsurance businesses and portfolios. He previously built and led Arch Capital’s mortgage credit business.

David Ryan has joined Barclays as director, CLO syndication, based in New York. He was previously director, head of US CLO syndication at Deutsche Bank, which he joined in January 2004.

RMBS provisioning mechanism enhanced
Finance Ireland Credit Solutions is in the market with its third Irish RMBS, Finance Ireland RMBS No. 3. In addition to loss-based provisioning, the STS transaction features a provisioning mechanism based on the arrears status of a loan, which increases with the number of months in arrears. Consequently, excess spread can be trapped earlier in the recovery process, which Rabobank credit analysts describe as “a clear positive”.

The securitisation is backed by a €292.35m provisional pool of 1,142 owner-occupied mortgage loans, with an average seasoning of 4.89 months and a weighted-average current indexed LTV of 72.65%. First-time buyers and self-employed borrowers account for 43.19% and 18.05% of the collateral respectively.

Classes A through F are being publicly offered. Pricing is expected next week.

BofA Securities is arranger on the deal and is joined by BNP Paribas, Citi and Standard Chartered as joint lead managers. The initial option holder is funds advised by M&G.