Sector developments and company hires

SLM EODs eyed

Fitch has downgraded from single-B to double-C the outstanding class A4 and B notes of SLM Student Loan Trust 2007-7, 2008-1 and 2008-4, due to the legal final maturity date of the class A4 notes being approximately three months away in January 2022 for SLM 2007-7 and 2008-1 and less than 10 months in July 2022 for SLM 2008-4. The agency notes that repayment by the legal final maturity date is unlikely under its maturity stress scenarios without an extension of the outstanding class A4 legal final maturity date or without support from the sponsor.

If the class A notes miss their legal final maturity dates, it would constitute an EOD on each transaction's indenture, which would result in diversion of interest from the class B notes to pay class A notes until paid in full. This would cause the class B notes to default as well.

Each trust has entered into a revolving credit agreement with Navient, by which it may borrow funds at maturity in order to pay off the notes. Furthermore, Navient has requested investor consent to extend the legal final maturity dates for these transactions.

Additionally, Fitch has downgraded the ratings assigned to the outstanding class A3 and B notes of SLM Student Loan Trust 2008-3 to single-D, reflecting the default on the senior notes in the payment of their outstanding principal on their legal final maturity date of 25 October 2021. Class B interest payments have been diverted to the class A notes until payment in full, given the provisions in the indenture that change the cashflow waterfall while an EOD is continuing.

The agency says it will continue monitoring remedies to the occurrence of the EOD implemented by the noteholders or transaction parties, as provided under the trust indenture, and take any additional rating action based on the impact of those remedies as needed. According to the trust indenture, the EOD may result in acceleration of the notes as declared by the indenture trustee or by a majority of noteholders, or in the liquidation of the trust.

In other news…

EMEA

Alcentra has appointed three new members of their Responsible Investing (RI) team in latest move to build out the division. Ross Curran will now lead the team as head of responsible investing, having been at Alcentra for over 15 years, will lead on the implementation of responsible investment strategy in all areas across the RI team – including securitisation. Additionally, Adriana Carvallo will join the RI team as head of ESG integration, having previously been at Norges Bank Investment Management, and Amanda Provencal has been recruited as ESG analyst to support the integration process by ensuring Alcentra’s delivery on key outcomes.

Paulette Mastin and Paul Regan have joined Reed Smith’s financial industry group in London, as partner and counsel respectively. Previously counsel at Linklaters, Mastin advises bank and independent corporate trustees, agents and companies on a wide variety of capital market transactions, including CDOs, CMBS and RMBS. Regan - who brings to Reed Smith critical in-house experience from his previous role at Bank of New York Mellon - focuses on advising corporate trustees on the full breadth of finance and capital market transactions, including securitisations.

North America

Dechert is welcoming back Jon Burke as partner at the New York office, having previously worked as an associate at the firm, Burke will serve as partner in global finance and play a key role in Dechert’s structured credit and CLO product line. With extensive experience offering advisory in connection with different CLOs to investment banks, asset managers, issuers and investors, Jon Burke’s return will aid Dechert’s global finance practice primarily in the CLO market and aims to enhance client services.

New York-based asset management firm, MidOcean Partners, has announced partnership with Hunter Point Capital (HPC) in latest bid to secure long-term growth. The strategic investment from HPC is its first since being launched in 2020, and has secured them a minority share of the firm. Operating and specialising in middle-market private equity and alternative credit investments for over 20 years, MidOcean intends to leverage the HPC capital to build upon this record and broaden their talent portfolio. While the terms of investment have not been disclosed, MidOcean confirmed operations, including day-to-day and investment processes, will remain unchanged.

SitusAMC has recruited 1,500 employees amid expansion to aid support capacity across both originations and secondary market due diligence. The new recruits are expected to accelerate the turnover of loans into private-label securitisations, as elevated loan production remains high throughout 2021 following a boom in 2020 with MBA reporting a total of US$4.3trn in mortgage loans. This additional capacity will be used to establish dedicated, customised client support teams and services, and offer further support to sellers and internal stakeholders.

Vibrant Capital Partners has bolstered its structured credit investment and business development teams with two new hires. Shawn Lim, former vp of corporate structured products at Oak Hill Advisors, has joined Vibrant as a vp in its structured credit investment team. He will be responsible for sourcing, analysing and executing investments in CLO liabilities and equity.
Zachary Radler, former director at GoldenTree Asset Management, has joined Vibrant as a director in its business development team. Radler will focus on deepening the firm’s relationships with institutional investors across North America.

Wells CTS sale completed

Wells Fargo has completed the sale of its corporate trust services business to Computershare (SCI 29 April), including the vast majority of management, personnel, processes and technology platforms pertaining to the CTS business. Moody's notes that Wells Fargo plays key roles - including trustee, master servicer, calculation agent, paying agent, backup servicer, cash manager and custodian - in many of the US structured finance transactions that it rates.
Wells Fargo has advised Moody's that on the closing date of the sale (1 November), Wells Fargo transferred its roles and responsibilities under the relevant transaction agreements for some of the transactions of the CTS business. For other transactions, including all of the transactions rated by Moody's where CTS plays a role, the parties intend to transfer the roles in stages as requirements from the underlying trust contracts are met. Where one or more of the roles played by Wells Fargo did not transfer at closing, Computershare will perform all or virtually all of the roles as an agent of Wells Fargo pursuant to a servicing agreement.