Market updates and sector developments

Blackstone has integrated its market-leading corporate credit, asset-based finance and insurance groups into a single new unit, named Blackstone Credit & Insurance (BXCI). Credit and insurance is Blackstone’s fastest-growing segment – more than doubling to US$295bn in assets under management over the last three years.

The new structure is designed to further accelerate growth by creating a more seamless experience for clients and borrowers. BXCI will offer a one-stop solution across corporate and asset-based, as well as investment grade and non-investment grade, private credit.

Gilles Dellaert, global head of Blackstone Insurance, will serve as global head of BXCI and lead the business’s combined operations. Since Dellaert joined the firm in 2020, Blackstone has nearly tripled the assets it manages for insurance clients.

Dwight Scott, global head of Blackstone Credit, will serve as chairman of BXCI, prioritising client relationships, key growth initiatives and the further expansion of the firm’s European platform. Scott is a nearly 20-year veteran of Blackstone, who has built a world-class credit business with market-leading positions in direct lending, energy transition, leveraged loans and CLOs.

Dellaert and Scott will be supported by long-tenured heads of Blackstone’s investment businesses, who will be taking on expanded roles in BXCI - including Rob Horn, global head of sustainable and structured credit, and Rob Camacho, global head of asset-based finance. Jonathan Pollack will continue to lead Blackstone’s US$67bn real estate credit business as global head of real estate credit.

In other news…

Ginnie launches social bond label
Ginnie Mae has launched its ‘Social Bond’ label for single-family forward MBS prospectuses and released a Social Impact and Sustainability Framework. Together, these updates support Ginnie Mae's mission-oriented work and communicate the positive social impact of its programmes to investors. The aim is to help increase investor awareness of the value proposition in Ginnie Mae securities, increasing opportunities to attract new sources of capital in support of lenders and borrowers Ginnie Mae ultimately serves.

The prospectus revisions highlight structural aspects of Ginnie Mae’s programmes that have a significant social impact by promoting broader access to mortgage financing for historically underserved communities. Investors will have the choice, along with MBS pool level disclosure data, to independently determine Ginnie Mae MBS as ‘Social Bonds’, meaning the underlying collateral is designed to support a positive social and affordable housing outcome.

YieldStreet settles SEC action
The US SEC has announced a settled action against New York-based YieldStreet and its registered investment adviser subsidiary, YieldStreet Management, for failing to disclose critical information to investors in a US$14.5m ABS offering. In September 2019, YieldStreet offered securities to finance a loan a YieldStreet affiliate made to a group of companies to transport a retired ship and arrange its deconstruction. The SEC’s order finds that the collateral for the loan was the ship to be deconstructed and that YieldStreet’s right to the ship was the most important security for the loan and the securities that YieldStreet sold to investors, yet the firm failed to disclose to investors a heightened risk that it would be unable to seize the ship in the event of a default.

The order finds that, prior to the offering, YieldStreet personnel had information showing that ships securing other loans that YieldStreet affiliates had made to the same borrowing group were reported as deconstructed without any notice or repayment or could not be located because their tracking systems were off. According to the order, the firm proceeded with the offering without disclosing this material information to investors.

The order states that YieldStreet later concluded that the borrowing group caused the ship securing the September 2019 offering to be deconstructed, but it stole the deconstruction proceeds by not repaying the loan from YieldStreet, leaving investors facing millions of dollars of losses.

Without admitting or denying the findings, YieldStreet consented to the entry of an SEC order finding that it violated certain antifraud and other provisions of the federal securities laws. The SEC’s order requires the firm to cease and desist from these violations and to pay more than US$1.9m in penalties, disgorgement and interest.