Sector developments and company hires

SASB CMBS IRC agreements eyed

Nearly 75% of US floating rate single-asset/single-borrower (SASB) CMBS loans in KBRA-rated transactions have current interest rate cap (IRC) agreements with strike rates below their prevailing index, which is typically one-month term SOFR or one-month Libor. Against the backdrop of sharply rising short-term interest rates, the rating agency has released a report examining IRC agreements for SASB loans, including certain IRC extension requirements that are prevalent across its universe.

Among the findings of KBRA’s review is that 18 transactions (accounting for 39.1% of the sample) specify that the replacement IRC strike rate should be the greater of a specified rate or sufficient to achieve a minimum debt service threshold, while 16 (34.7%) require the replacement IRC strike to be based on a rate that would be sufficient to achieve a minimum debt service threshold. Meanwhile, 14 (30.4%) allow the borrower and lender to negotiate a different replacement IRC strike rate if the current requirement is deemed to not be available at commercially reasonable rates or at a reasonable cost.

In other news…

Ambac settles final legacy RMBS litigation

Ambac Assurance Corporation (AAC) has entered into a settlement agreement with Nomura to settle its RMBS litigation against the bank. As a result, Nomura has agreed to pay AAC US$140m, which materially exceeds the amount of subrogation recovery recorded on Ambac’s 3Q22 consolidated GAAP financial statements attributable to the Nomura litigation. Accordingly, Ambac estimates that it will record a gain with respect to the settlement of approximately US$43m, which will be recognised in Ambac’s fourth quarter financial results.

Funds are expected to be received within 10 business days from the execution date of the settlement agreement. AAC will use all proceeds, plus cash on hand, to repay the entire outstanding balance of its Tier 2 notes.

Following the previously announced Bank of America settlement (SCI 7 October 2022), Ambac has now successfully brought to a close all of its legacy RMBS representation and warranty litigation.

EMEA
Jefferies has promoted its EMEA CLO primary co-heads Hugh Upcott Gill and Luis Leon Carsi to the position of md. The London-based pair were previously svps at the firm, which poached them from Citi in September 2020.

Michal Marciszewski has joined PKO Bank Polski as director, head of securitisation, based in Warsaw. He was previously head of securitisation at Getin Noble Bank, which he joined in December 2010. Before that, Marciszewski worked at Bank Millennium and pension fund EGO, and was a board member of BPI Bank Polskich Inwestycji.

Rockstead has appointed David Hunter to a senior development role as it continues to work to strengthen its team. The due diligence and business review provider welcomes Hunter from NatWest’s property risk team where he most recently served as property risk policy and proposition manager. Hunter brings extensive experience with him to his new position as senior business development manager across lending, property risk, and managing third-party suppliers. 

Universities Superannuation Scheme has appointed Liam McClure as legal counsel, supporting the investment management arm within the private markets group. He was previously a broker within Texel’s structured and bespoke insurance solutions unit, involved in synthetic securitisations. Before that, McClure was legal counsel at Emirates NBD and 23 Capital, having trained as a solicitor at Baker McKenzie.

Private debt CFO closed

Tikehau Capital last month completed its inaugural CFO. The US$300m transaction is backed by interests in private debt funds that were mainly held on Tikehau Capital’s balance sheet, including exposure to the firm’s flagship direct lending strategy and its private debt secondaries strategy.

The rated debt and equity tranches were placed with large US institutional investors, while Tikehau Capital retained a portion of the equity. The transaction is expected to have a positive impact of circa US$200m on Tikehau Capital’s cash position over the life of the vehicle.