Sector developments and company hires

CLN rating pressures eyed
US midsized banks’ utilisation of CLNs to drive share repurchases or to increase leverage could result in negative rating pressures, Fitch suggests. The rating agency notes that for midsized banks, CLNs may have a material impact on regulatory capital ratios, as the reference pools comprise a larger portion of overall lending than for large banks.

Although use of CLNs by midsized banks has been limited to date, undue reliance on the product may result in a negative adjustment to a bank’s capital assessment, which could pressure credit ratings and/or rating outlooks. In its ratings, Fitch considers both the risk profile of reference pool assets and a bank's motivation for utilising CLNs. If a CLN issuance significantly affects the benchmark CET1 ratio, more importance is placed on complementary metrics, such as Tier 1 leverage.

“Through the reduction of risk-weighted assets, banks issuing CLNs will see its CET1 ratio increase, all else equal. However, utilising the expanded regulatory capital headroom to support increased lending or additional capital returns would reduce the Tier 1 leverage ratio. Thus, the risk-weight reduction associated with CLNs is viewed as either credit neutral or negative, leaning towards the latter if the issuing institution then takes on additional balance-sheet risk,” Fitch explains.

The agency concludes that rising interest rates will increase the cost of CLN issuance, as they are floating-rate instruments tied to an index rate, with a premium attached to compensate for the credit risk transfer to the noteholders. This risk is increased when the reference pool contains fixed-rate loans, which can cause banks to overpay for the associated risk transfer.

In other news…

Apollo, Belstar deepen relationship
Belstar Management Company has launched a flagship credit fund - Belstar Credit Opportunities Fund - to invest across liquid and private credit opportunities, including corporate and structured credit assets globally. To support a subset of the investment strategy, Belstar intends to partner with Apollo, in order to access high quality credit assets originated across Apollo’s global platform. The move deepens the strategic relationship between Belstar and Apollo, which formed a non-bank lending joint venture focused on serving Korea-based companies and sponsors (SCI 9 August).

EMEA
Altamira doValue has established a business unit specialising in the management of portfolios bought by investment funds and their growing interest in investing in the Spanish market. Headed by chief investors officer Conrado Caviró, the team currently boasts over 150 professionals and offers specialised technology, an integral vision of assets and bespoke solutions for investors. Caviró joined Altamira doValue in March - having previously worked at Hipogés and Interpares - and is a member of the company’s executive committee.

Cadwalader, Wickersham & Taft has added ESG finance and investment partner Sukhvir Basran in the firm’s London office, strengthening its offering across funds finance, private credit, securitisation, CLOs and real estate finance. Basran joins from Hogan Lovells, where she co-established and co-led the firm’s global sustainable finance and investment group. Combining her experience as a banking and finance lawyer and in sustainable finance and investment, Basran advises a range of clients on ESG strategies, policies, frameworks, disclosure and reporting, ESG-related transactions and products, and the integration and alignment of ESG across investment processes.

Naseem Hossain has joined M&G Investments as head of private markets credit, based in London. With experience in structured finance and non-performing loan workouts, he was previously interim cfo at Acre and before that worked at Aviva, Alvarez & Marsal, Goldman Sachs and RBS.

Private assets unit formed
BNP Paribas has formed a new private assets business unit within its investment and protection services (IPS) division, with the aim of becoming a leading European player in private asset management. Integrated within BNP Paribas Asset Management and operational as of January 2023, Private Assets will combine private asset management expertise across IPS and will operate in close collaboration with BNP Paribas CIB and the group's distribution networks.

The new unit will prioritise development in two key areas: direct management focused on a defined range of verticals - corporate financing, real assets (infrastructure and commercial real estate debt) and individuals’ financing (with Dynamic Credit Group); and indirect management, focused on investment in private asset funds, and advisory in fund selection. The business will be headed by David Bouchoucha, who becomes head of private assets, reporting directly to BNPP AM ceo Sandro Pierri.