Sector developments and company hires

CLO ETF moves down cap stack
Janus Henderson Group has filed a preliminary registration statement with the US SEC for the Janus Henderson B-BBB CLO ETF (JBBB) for US investors. The exchange-traded fund - which is expected to be the first ETF focused on providing exposure to single-B to triple-B rated CLO tranches - will be managed by portfolio managers John Kerschner and Nick Childs.

The launch of JBBB follows the pioneering launch of the Janus Henderson AAA CLO ETF (JAAA) and will provide investors with additional options to gain exposure in this traditionally hard-to-access asset class. If all approvals are granted, the fund is expected to launch on or around 15 December 2021.

In other news…

Aircraft lessor formed
Castlelake has formed Castlelake Aviation (CA), a corporate lessor of commercial aircraft that will finance a portfolio of modern, young, fuel-efficient aircraft. The move builds on Castlelake's history of innovation in aviation finance, including its establishment of an aviation lending business in late 2020 and its reopening of the aircraft ABS market with Castlelake Aircraft Structured Trust 2021-1 in January 2021.

CA will directly benefit from this differentiated expertise and senior Castlelake aviation leaders, including Joe McConnell and Otto Verhoeff, who will serve on CA's board and be directly involved in the development, execution and oversight of its growth strategy.

Upon its formation, CA's initial portfolio will be composed primarily of next generation, narrowbody aircraft on long-term leases to leading international airlines and CA will maintain a similarly high-quality, fuel-efficient fleet by utilising Castlelake's robust trading and re-marketing capabilities. Additionally, CA's growth trajectory will be supported by Castlelake's extensive near-term pipeline of investing opportunities, including active negotiations for over 40 aircraft representing over US$2bn in potential investments, primarily in newer technology assets.

CA's portfolio will be financed by a mix of secured and unsecured debt instruments, in addition to equity capital provided by funds managed by Castlelake.

Asian infrastructure partnership inked
Clifford Capital Holdings (CCH) will act as a strategic partner to a sustainable infrastructure debt financing platform to be established by HSBC and Temasek under a proposed partnership. HSBC and Temasek will invest up to a combined US$150m of equity to fund loans, working alongside the platform’s strategic partners, CCH and the Asian Development Bank (ADB) in the initial phase.

The ambition for the platform is to build a pipeline of projects to scale, dispensing over US$1bn of loans within five years, with a meaningful portion targeting marginally bankable sustainable infrastructure projects. Based in Singapore, the platform will target renewable energy and storage, water and waste treatment and sustainable transport to help meet carbon reduction targets and build resilience to offset the impact of climate change.

Aligned with CCH’s commitment to sustainability as well as to address the infrastructure financing gap in Asia, the platform will leverage CCH’s networks, expertise and experience to support set-up of the platform prior to launch. CCH will also provide a combination of middle- and back-office support as a managed services provider when the platform is fully operational.

Call for CRA Regulation update
ESMA has published an opinion on how access to and use of credit ratings can be improved in the EU. In the opinion, ESMA highlights the difficulties experienced by users of credit ratings and recommends that legislators amend the CRA Regulation or take alternative legislative action to address them.

The opinion notes that the usability of credit ratings is severely limited, as they cannot be accessed in a machine-readable format or downloaded in sufficient numbers to be used for regulatory purposes. In practice, users mainly access and use credit ratings and related research reports through licenses for data feeds and platform services offered by other companies in CRAs’ groups. These companies are not currently subject to regulation and their licensing practices and the high fees charged raise both investor protection and competitiveness concerns, according to ESMA.

EMEA
Michael Rurik Halaby has joined MUFG’s London aviation finance office as md and head of aviation advisory, with over 20 years of experience in the sector, including aircraft ABS. He was previously head of aviation debt origination – EMEA at Deutsche Bank, which he joined in 2016. Before that, Halaby worked at Valais Advisory, BNP Paribas and ABN AMRO.