Sector developments and company hires

Citi and Bank of America, joined by Credit Suisse, Goldman Sachs, JPMorgan, Morgan Stanley, Wells Fargo and Moody’s Analytics, have launched Octaura Holdings. The objective of the company is to create the first open-market electronic trading platform for syndicated loans and CLOs.

Built in collaboration with software development platform Genesis Global, Octaura aims to provide comprehensive trading solutions with natively integrated data and analytics. The Octaura venue for loans will launch first, with the CLO trading venue to follow. The company then plans to expand to other products in the credit market.

Octaura began as a joint incubation and co-development initiative between Bank of America and Citi, within its SPRINT (Spread Products Investment Technologies) team. Citi’s internal Velocity CLO eBidding platform and BofA’s Instinct Loan Match platform improved efficiency, liquidity and transparency for users and were the inspiration for Octaura.

Industry veteran Brian Bejile has been named ceo and a member of the Octaura board. Previously, Bejile spent more than 18 years with Citi, rising to global head of CLO issuer management.

Octaura will provide electronic trading protocols for price negotiations, straight-through processing (STP) for trade booking, and data and analytics functionality supplied by Moody’s Analytics, for the first time in one cohesive solution.

In other news……

EMEA

Akin Gump has welcomed a new structured finance partner to its London office in a move to expand its structured finance offering and enhance its CLO practice. Dasha Sobornova will focus on CLO transactions - advising arrangers, investment managers, and issuers across structured finance products. Sobornova joins the firm from Mayer Brown, where she also led its CLO practice in her role as banking and finance partner, and brings with her extensive expertise in EU and UK securitisation regulation. Her appointment is the latest Akin Gump structured finance hire, and follows the recent appointment of new head of structured finance and securitisation in Los Angeles, Deborah Festa.

Jeremy Hermant has joined SME-focused Allica Bank as head of capital markets, based in London. Hermant was previously a senior manager at British Business Bank, responsible for originating and structuring SME risk transfer transactions. Before that he was vp in Santander’s private debt mobilisation, notes and structuring team. He has also worked at Mariana UFP, AXA Investment Managers and HSBC.

Chorus Capital has appointed Nicholas Jaroszek as director, capital formation, based in London. Jaroszek was previously an adviser in Oliver Wyman’s insurance and asset management practice. Before that, he had business development and investor relations roles at Värde Partners and PIMCO.

Isabel Tinsley has joined Hogan Lovells as counsel, based in London. Tinsley was previously a senior associate within Allen & Overy’s securitisation team, having begun her career at Cadwalader in February 2008.

North America

Davis Wright Tremaine is set to combine with financial services boutique, McGonigle, in a bid to enhance its regulatory and enforcement capabilities. The combination will see Davis Wright’s banking and financial service practice more than double in size with the addition of 44 lawyers from McGonigle, helping boost its presence in the East Coast and Midwest markets. McGonigle will add 22 lawyers to Davis Wright’s Washington, DC office, 15 in New York, three in the firm’s new Chicago office, and four to the soon to be established office in Richmond, Va. The combination was driven by the increasing changes in the financial services industry, with the main hope of joining McGonigle’s experience in securities regulation with Davis Wright's in consumer banking, payments and fintech. The combination will be effective from 1 July 2022.

Sixth CIRT completed

Fannie Mae has completed its sixth CIRT deal of the year, designated CIRT 2022-06. The transaction transfers risk on US$725m of mortgage loans to 24 separate insurers and reinsurers.

Fannie Mae will retain risk for the first 55bp of loss on the US$19.3bn unpaid principal balance in the covered loan pool. If this US$106.3m retention layer is exhausted, the 24 insurers and reinsurers will cover the next 375bp of loss, up to a maximum coverage of US$725m.

The loan pool for the deal consists of approximately 63,000 single-family mortgages. It is a low LTV deal, with LTV ratios of between 60% and 80% on mortgages acquired between August 2021 and September 2021.

This CIRT deal follows the sixth CAS transaction of the year, which Fannie Mae placed in the debt markets last week.

Smaller loans dominate CMBS resolutions

Although 2021 saw a dramatic increase in total US CMBS loan resolutions from prior years, only 25% of those loans were disposed of with losses, as special servicers resolved a high number of pandemic-related transfers, according to Fitch’s latest annual US CMBS loan loss study. Total 2021 resolutions increased to US$15.5bn from under US$8bn in each of the last three years.

Almost 75% of the total loan resolutions were resolved without losses or returned to the master servicer, compared with two-thirds in 2020. Approximately 60% of the resolutions that returned to the master servicer were modified or granted some kind of consent or forbearance; the balance were either denied relief or withdrew the request for relief.

The loss severity for the US$3.1bn in loans disposed of with losses in 2021 was 56%, compared with US$1.9bn disposed of in 2020 at a 55.5% loss severity. When not weighted by loan size, the 2021 average loss severity for these loans is 43.1%. Fitch notes that this is because smaller loans with lower loss severities dominated resolutions last year: 85% of loans disposed of with losses had an original balance of US$25m or less.

Approximately 80% of all resolutions and 80% of all loans with losses were either retail or hotel loans, with both sectors seeing a noticeably higher number of resolutions compared to 2020.