Sector developments and company hires

Transitional disclosure measures urged
In a letter to the EBA, EIOPA and ESMA, the SFA and 12 other trade associations have requested a pragmatic supervisory approach to the disclosure requirements under the EU Securitisation Regulation (SECR) while the regulators review the current requirements. The associations argue that transitional measures are needed following the European Commission’s interpretation in its recently released report on the functioning of this regulation (SCI 11 October) and “preceding years of ambiguity and industry requests for clarification” around the application of the reporting requirements.

Specifically, the associations have significant concerns about the Commission's interpretation of Article 5(1)(e) set out at section 11.2 of the SECR Report that requires EU institutional investors to obtain full Article 7 information - even in relation to third-country securitisations - by stating that "it is not appropriate to interpret Article 5(1)(e) in a way that would leave it to the discretion of the institutional investors to decide whether or not they have received materially comparable information". The letter notes that third-country reporting entities have been reluctant to provide full Article 7 information, since they would need to make substantial and costly adjustments to their reporting systems to comply with the Article 7 templates. “We expect this reluctance to increase further now that the templates for private securitisations are expected to be significantly changed (and simplified so as to significantly reduce the scale of the changes and costs required) in the relatively short term,” the letter states.

It goes on to say that the effect of the SECR report is to exclude EU institutional investors from investing in most third-country securitisations – significantly reducing the universe of securitised products in which they may invest. “The SECR Report goes on to make clear that it is the Commission's expectation and policy intention that the resulting competitive disadvantage imposed on EU institutional investors should be addressed by the introduction of a new private securitisation template that all private securitisations would use, whether EU or third country. If this happens, the de facto exclusion the Commission refers to would only be temporary. This outcome is perverse – the more so because EU institutional investors are not, in general, taking as relaxed a view of the requirements of Article 5(1)(e) as the Commission might fear.”

For example, as required under Articles 5(3) and 5(4), EU institutional investors are already required to carry out a due-diligence assessment that enables them to assess the risks involved. Such investors also have in place written policies and procedures for the risk management of their investments in securitisations. Additionally, EU institutional investors are protected by other requirements, such as risk retention and disclosure of credit-granting standards.

As such, the letter indicates that the SECR report's interpretation of Article 5(1)(e) denies EU institutional investors the ability to make suitable investment decisions and generate attractive yields balanced by the risk mitigation offered by global diversification, for both themselves and their clients. “This loss of investment opportunity will create costs for European stakeholders of all kinds. To the extent that they are asset managers, it will negatively affect their ultimate stakeholders – who are broadly members of the public in the EU (e.g. via pensions). A further concern is that this will also result in a loss of liquidity for the non-EU borrowers who rely on EU lenders and other institutional investors to raise capital, with attendant harm to the global real economy.”

The associations suggest that the best solution to address the period between now and the finalisation of the new private securitisations template would be the issuance of enforcement guidance by the Joint Committee of the ESAs addressed to national competent authorities (NCAs). That guidance would set the expectation that NCAs would apply their supervisory powers in their day-to-day supervision and enforcement of Article 5(1)(e) in a proportionate and risk-based manner. This approach would entail that NCAs can - when examining EU institutional investors' compliance with Article 5(1)(e) of the SECR - take into account the type and extent of reliable information already available to them, regardless of format or source.

The 12 other associations are AFME, AIMA, Alternative Credit Council, Australian Securitisation Forum, European Fund and Asset Management Association, IACPM, ICMA, Insurance Europe, ISDA, MFA, SIFMA and True Sale International.

In other news…

ABS CDOs transferred
Dock Street Capital Management has been appointed as successor collateral manager for Bernoulli High Grade CDO I and Euler ABS CDO I. Babcock & Brown Securities was the original collateral manager of the transactions, but was succeeded by Threadneedle International in November 2009. Moody’s confirms that the move will incur no adverse rating impact on the notes issued by either deal.

EMEA
Nationwide has promoted Rob Collins to deputy treasurer. Based in London, he was previously head of treasury sustainability and debt capital markets at the building society, which he began working with initially as a consultant in July 2008. Before that, Collins held securitisation-related roles at Morgan Stanley and Abbey.

T-REX has launched a new EMEA division operated from the UK. To lead its business expansion across the region, the firm has hired fintech executive Ben Sher, who was formerly chief commercial officer at London-based Funding Xchange. The move follows a US$40m Series C funding round led by Riverstone Holdings earlier in the year, supporting the rapid growth in customer acquisitions. The cloud-based T-REX platform provides cashflow modelling and projections, portfolio analysis, on-demand reporting and risk management of complex investments across the asset-backed finance spectrum, with advanced support for renewable energy and ESG-driven investment.

North America
Annaly Capital Management has appointed Steven Campbell, the company’s coo, to the additional office of president, effective immediately. As president and coo, Campbell will continue to report to ceo and cio David Finkelstein, who previously held the role of president since March 2020. Campbell joined the company in April 2015 and has served as coo since July 2020. He has over 25 years of experience in financial services, including at Fortress Investment Group, General Electric Capital Corporation and D.B. Zwirn & Co.

Vida Capital, a portfolio company of RedBird Capital Partners and Reverence Capital Partners, has undergone a corporate rebranding - including changing its name to Obra Capital - as part of its business evolution. The name change follows Obra’s numerous additions to its leadership team, adding professionals experienced in crafting alternative asset management solutions. On top of its continued focus on longevity investing, the company has added three new core strategies: insurance special situations (providing customised, solution-based capital and sophisticated structuring to insurance-related opportunities); structured credit (the company’s leadership has a longstanding presence in CLO and other structured markets as investors and managers); and asset-based finance (focusing on assets that perform based on contractual outcomes and/or the operational efficiency of an originator).

Polish SME CRT inked
The EIB Group has signed a synthetic securitisation and new lending commitments with Santander Consumer Bank (SCB) in Poland, marking the third capital relief transaction entered into between EIB Group and SCB, with the earlier transactions being a true sale securitisation from 2016 and a synthetic securitisation from 2019. Under the latest transaction, SCB commits to provide new lending for an amount of up to PLN1.53bn (€327m) over a three-year period.

Most of the new lending will be extended to SMEs, with the remainder extended to mid-caps and private individuals undertaking climate action projects. At least 20% of the financing will go to projects contributing to climate action and environmental sustainability.

The increased lending capacity for SCB stems from the unfunded protection issued by the EIF, referencing a granular portfolio of consumer loans held by SCB (subject to the standardised approach to credit risk) with a total outstanding balance of PLN1.15bn (€245m). The synthetic securitisation is structured such that EIF provides protection on the PLN198m mezzanine tranche and the PLN934m senior tranche.

The majority of the EIF’s exposure is, in turn, counter-guaranteed by the EIB under a back-to-back guarantee covering 100% of the mezzanine tranche exposure and 50% of the senior tranche exposure.

The transaction features synthetic excess spread in the form of use-it-or-lose-it, a two-year replenishment period and pro rata amortisation of the senior tranche and the mezzanine tranche (subject to performance triggers).