Sector developments and company hires

Specialist lender stake acquired
BNP Paribas Asset Management (BNPP AM) is set to acquire a majority stake in Dynamic Credit Group, the Amsterdam-based asset manager and specialist lender with €9bn of assets under management. The deal will allow BNPP AM’s private debt and real assets (PDRA) investment division - which currently managed €11bn of client commitments - to significantly grow its asset base, while providing Dynamic Credit with access to a large and global distribution network.

The acquisition of Dynamic Credit is in line with BNPP AM’s strategy of accelerating the expansion of its investment platform, particularly within the strategically important area of private markets. The closing of the transaction is subject to regulatory approval.

Dynamic Credit manages assets consisting primarily of Dutch mortgages, which it originates through its own online platform, bijBouwe, and other channels. The firm has built on its expertise within the origination and management of granular loan portfolios to source personal loans and SME loans for its Diversified Loan Fund. Within Dynamic Credit, LoanClear serves as an independent advisory firm focusing on illiquid credit investments.

Dynamic Credit will be incorporated into PDRA, while continuing to operate as an independent entity under the leadership of ceo and founder Tonko Gast, who will report to its board and to David Bouchoucha, cio and head of PDRA.

In other news…

Combo note charges settled
DBRS has agreed to pay US$1m to settle SEC charges relating to the rating of CLO combo notes. The SEC's order finds that DBRS's policies and procedures were not reasonably designed to ensure that it rated CLO combo notes in accordance with the terms of those securities.

While the CLO combo notes included a defined ‘rated balance’ amount, noteholders were entitled to all cashflows from the underlying components of the CLO combo note, which could be greater than the rated balance. Credit ratings that DBRS issued to CLO combo notes considered the risk of default on the rated balance only, and not the risk of default on all amounts that the issuer was obligated to pay based on all of the cashflows from the underlying components. Consequently, DBRS's credit ratings for CLO combo notes did not address the risk of default in payment of the proceeds in excess of the rated balance, even though holders of those notes were entitled to receive such amounts in accordance with the payment terms of those securities.

The SEC's order finds that DBRS violated Rule 17g-8(b)(1) of the Exchange Act. Without admitting or denying the SEC's findings, DBRS agreed to pay a civil penalty of US$1m and to undertake to review, and revise as necessary, its internal policies and procedures relating to the violations.

Data partnership agreed
1010data and Moody’s Analytics have partnered to deliver an expanded data set to the fixed income marketplace through the 1010data platform. Complementing its current base of over 100 MBS and ABS datasets, the relationship with Moody’s Analytics will add data on 9,000 non-agency MBS deals, encompassing over 40 million loans on the 1010data platform. Users of the 1010data platform can now harmonise the Moody’s Analytics data with complementary data sets for prepayment, default, delinquency and loss-severity analysis.

Further ABSF investments announced
The AOFM reports that two transactions have been given in-principle approval by the Australian Business Securitisation Fund delegate for investment, subject to the satisfactory completion of commercial negotiations and documentation processes. An allocation of US$87.5m has been made to a mezzanine investment in a warehouse sponsored by GetCapital and arranged by National Australia Bank, who will also act as the senior financier. Other mezzanine investors are participating in the transaction.

An allocation of US$30m has also been made to a mezzanine investment in a warehouse sponsored by OnDeck Australia and arranged by Credit Suisse, who will act as the senior financier.

In addition to these transactions, the AOFM is in discussions with other proponents whose transactions are at differing stages of development and assessment.

Meanwhile, the AOFM says it has recently indicated to CIP Asset Management that it will exercise its option to extend the investment management agreement for two years, from December 2021 to December 2023.

GSE PSPAs under review
The FHFA and the US Treasury have suspended certain provisions added to the Preferred Stock Purchase Agreements (PSPAs) with Fannie Mae and Freddie Mac on 14 January 2021. This suspension will allow the FHFA to review the extent to which these requirements are redundant or inconsistent with existing FHFA standards, policies and directives that mandate sustainable lending standards. The FHFA will consult with Treasury on the scope of the review and on any recommended revisions to the PSPA requirements.

The suspended provisions include limits on the GSEs’ cash windows, multifamily lending, loans with higher risk characteristics, and second homes and investment properties. The enterprises will continue to build capital under the continuing provisions of the PSPAs.

The FHFA says it is also reviewing the Enterprise Regulatory Capital Framework and expects to announce further action in the near future.