Market updates and sector developments

Climate transition risks linked to changes in energy-efficiency performance regulations are having a limited impact on the European RMBS market, according to research by S&P Global.  The view is the result of a scenario analysis conducted by S&P of properties in England, Wales, Ireland, France and the Netherlands with energy performance certificate ratings of F and G.

The agency acknowledges that, should valuation discounts increase for properties with low EPC classes, it may in future affect how it calculates foreclosure frequency and loss severity of RMBS loan pools. Furthermore, it says valuation discounts could become significant for owners of energy-intensive homes who do not carry out renovations to improve efficiency.

Mortgage loan pools with a high share of buy-to-let properties could also present a higher credit risk, S&P says. This is specifically likely in countries that have introduced — or look likely to introduce — rental market bans on properties with low energy efficiency.

In other news…

ICE secures Black Knight bolt-on

Intercontinental Exchange (ICE), the owner of mortgage loan origination system (LOS) Encompass, has completed the acquisition of its top competitor Black Knight, which owns the second largest LOS in the US, Empower. The deal closure comes five months after it was revealed (SCI 10 March) the US FTC was seeking to block the merger, claiming it would drive up costs, reduce innovation and reduce lenders' choice for tools necessary to generate and service mortgages.

The transaction follows similar bolt-on deals by ICE for Ellie Mae, Simplifile and Mortgage Electronic Registrations Systems in recent years, as it looks to build out its mortgage technology division.

Man Group completes Varagon buyout

Man Group has completed the acquisition of US middle market private credit manager Varagon Capital Partners (SCI 6 July). The acquisition is intended to allow Man Group to capitalise on increasing interest from private equity investors in the US middle market, as it strives to diversify its credit offering for clients in the country.