Sector developments and company hires

BREP default an ‘inflection point’?
A senior loan EOD has occurred in connection with Finnish single-loan CMBS FROSN-2018, after Blackstone Real Estate Partners failed to repay the loan on 1 March (SCI ABS Markets Daily - 2 March). The episode marks one of the first high-profile securitisation defaults of the current cycle.

The FROSN-2018 loan had been granted a temporary extension last month, to allow the senior borrower and the servicer to consult on next steps, but no agreement was reached on the terms of any further extension of the senior loan maturity date. As such, the final maturity repayment default triggered a special servicing transfer event and the loan is now under special servicing.

BofA Global Research notes that the default occurred in the context of current less favourable credit conditions. “The reality is probably less dramatic than the headlines suggest, but we think the default could mark an inflection point for the performance of high beta credit assets as borrowers adapt to higher rates.”

In other news…

Barings to absorb DPI, MMAF
Massachusetts Mutual Life Insurance Company is set to transition its Direct Private Investments (DPI) unit and equipment ABS issuer MassMutual Asset Finance (MMAF) to Barings in 2Q23. The objective is to enable the businesses to scale their investment strategies with access to additional third-party institutional investors through Barings' global platform, while allowing Barings to provide a broadened set of complementary investment solutions to its clients.

DPI provides customised proprietary secured loans to private capital managers and funds backed by a range of private capital assets. The team has originated more than US$35bn in private direct investments since inception and will continue to serve its borrowers with the same standards of confidentiality.

MMAF originates, underwrites, funds and manages large-ticket capital equipment transactions throughout the US. Since inception, MMAF has funded more than US$20bn in new equipment purchases.

DPI and MMAF will report to Barings president Eric Lloyd, who oversees a diverse set of organisations, including cross-asset investment teams. The structure will enable the businesses to leverage the experience, capabilities and relationships across the Barings platform, while remaining separate business units.