Market updates and sector developments

Barclays Bank Delaware (BBDE) has entered into an agreement with insurance accounts managed by Blackstone’s asset-based finance group to sell approximately US$1.1bn of currently outstanding credit card receivables in relation to a defined set of Barclays-branded credit card accounts in the US. This is the first in a series of activities Barclays plans to conduct to reduce its RWAs and create additional lending capacity for BBDE (SCI 23 February).

Anna Cross, group finance director at Barclays, comments: “During our investor update, we said that we would leverage strategic partnerships to execute risk transfer agreements to reduce capital requirements. I am delighted to announce this first agreement in our US cards book.”

As part of the transaction, BBDE will enter into a long-term strategic forward flow sale and servicing arrangement with Blackstone related to the accounts. Blackstone’s investment will be made entirely on behalf of the firm’s insurance clients.

Under the terms of the transaction, BBDE will retain legal title in respect of the accounts and will continue to service the accounts for a fee. Barclays Bank will invest into the transaction alongside Blackstone’s insurance accounts.

The transaction is expected to release approximately £1bn of RWAs on a post IRB approach basis at the Barclays Group consolidated level. BBDE intends to use the proceeds of the sale to fund its lending activities.

Barclays Bank, acting through its investment bank, served as exclusive structuring advisor to Blackstone in the transaction, to which it also served as risk retainer and liquidity facility provider. The transaction remains subject to certain conditions but is expected to fund this quarter.

In other news…

Low-LTV CRT deal prepped
Fannie Mae will be in the market with a new low-LTV CAS deal next week, according to a speaker at the SFA conference in Las Vegas. The GSE will execute US$6bn-US$6.5bn in the credit risk transfer market in 2024, around US$4bn of which will be completed in the capital markets. Issuance will be front-loaded into the first half of the year, partly to take advantage of current favourable market conditions, but also to avoid possible turbulence in Q4 due to the US election.

Pretium lands minority investment
Pretium has formed a strategic partnership with Hunter Point Capital (HPC). The agreement, which includes a minority investment from HPC, aims to support the long-term growth of Pretium's existing strategies – residential real estate and corporate and structured credit – and enable the firm to expand into adjacent areas to create additional value for its clients, residents and employees. 

Since its founding in 2012, Pretium has become one of the largest investors in non-agency residential mortgage loans, one of the largest residential business purpose lenders, one of the largest investors in the creation of new homes and the largest owner-operator of single-family homes in the US. "During a time of significant growth and consolidation in the alternative asset management industry, HPC's investment advances many of our top growth initiatives and strengthens our ability to capitalise on the compelling opportunities we see in the residential and credit markets," comments Jonathan Pruzan, president of Pretium. "The persistent undersupply of homes, coupled with the disruption in the banking landscape will offer significant investment potential for the foreseeable future."

Corinne Smith, Simon Boughey