The last few weeks have proven to be a tumultuous period for the capital markets, and with it a stark (and painful) reminder has been duly delivered on the impact that they have on all aspects of business and the wider economy. Securitisation has also shown that it is not immune to this turmoil demonstrated
Estimated read time: 2 minutes 45 seconds
It would be fair to say that when it comes to securitisation, I have always been very upbeat about the huge potential of this technology and the integral role that it can play. This is not only in providing a cheaper form of credit for borrowers but also…
Read time: 3 minutes
The term “NPL Securitisation” has been bandied around a lot recently, and for good reason given the hugely important role it can play in the non-performing loan (NPL) arena.
As banks begin to contemplate life after COVID, they will be acutely aware of the need to neutralise NPLs sooner rather than…
Read time: 4 minutes 25 seconds
NPL Securitisation is a term that is very much en-vogue at the present time. Although its rise to prominence can be attributed to a number of factors, in recent weeks the chief contributor has been the European legislature steps towards amending the Securitisation Regulation and the Capital Requirements Regulation.…
Read time: 3 minutes 3o seconds
Although the United Kingdom (UK) left the European Union (EU) at 11pm on 31 January 2020, the terms of the Withdrawal Agreement between the UK and the EU provide for a transition period until 31 December 2020 (Exit Day). During the transition period, the European Securitisation Regulation (ESR)…
Read time: 5 minutes
On 2 April 2020, the European Banking Authority (EBA) published guidelines on legislative and non-legislative moratoria on loan repayments in light of COVID-19 (EBA/GL/2020/2) (the Guidelines). The Guidelines were updated by a supplementary supervisory statement addressing the treatment of securitised exposures subject to payment moratoria, issued on 22 April 2020.
The supplementary supervisory statement addressing securitised exposures establish where legislative and non-legislative moratoria should not trigger default or forbearance classifications for regulatory capital purposes and where actions taken under payment moratoria will not be considered a breach of the prohibition of ‘implicit support’.
Continue Reading EBA publishes additional supervisory measures on legislative and non-legislative moratoria on loan repayments in light of COVID-19
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A federal district court in New York is currently hearing a case to determine if syndicated term loans are securities under US federal and state Blue Sky securities laws. The case (Marc S. Kirschner v. J.P. Morgan Chase Bank, N.A.) came about when borrowers, Millennium Health, LLC and certain of its affiliates (“Millennium”), in a widely syndicated loan went into bankruptcy. The bankruptcy trustee (the “Trustee”) to certain trusts formed as part of the bankruptcy restructuring brought suit against the lending syndicate, including J.P. Morgan Chase Bank (“J.P Morgan”), as one of the lead arrangers alleging the lenders misrepresented the information provided to the trust’s beneficiaries (as represented by the Trustee) to determine if they wanted to participate in the Millennium syndicate. The Trustee asserts that J.P. Morgan sold its participation of a loan to Millennium which they were aware was having substantial economic and legal difficulty.
Continue Reading You Say Loan Participation, I Say Securities, Let’s Call the Whole Thing Off
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In a push to tackle Greek’s bad debt exposure, the Greek Parliament has approved a new asset purchase scheme nicknamed ‘Hercules’. The scheme aims to assist Greek banks deleverage their non-performing loans (NPLs) without the need for the government to step in with subsidies.
Under the scheme, banks will sell non-performing loans to a special purpose vehicle, which will use proceeds from the issuance of tranched notes to market investors to purchase the loans. The Greek government will provide a public guarantee for the senior notes in the securitisation vehicle at a market rate.
Continue Reading Greek’s bad debt exposure – Hercules to the rescue!
Read time: 2 minutes 29 seconds
As industry participants head off on their festive breaks, there will be a level of euphoria that despite unfavourable regulation, political uncertainty as well as a very cautious macro-economic outlook, the European CMBS industry has successfully not only avoided succumbing to many potential market pitfalls but when you take into account the volume of issuance as well as the heterogeneity of the deals that have graced the market, then 2019 can be said to be a positively booming year for the product.
Continue Reading BOOM, BOOM, BOOM – CMBS IS SHAKING THE ROOM
Read time: 2 minutes 45 seconds
Thus far CMBS has had a storming year and all current indicators point towards 2018 being a bumper year for the product. After two years of relative malaise on the primary issuance front, the first half of 2018 has proven to be anything but sluggish. Notable transactions that have so far taken place include Citibank and Morgan Stanley closing an extremely well priced transaction secured by Finnish assets (a CMBS 2.0 first), Bank of America Merrill Lynch achieving some hugely impressive pricing on an Italian CMBS and most recently the spotlight has turned to Goldman Sachs who have recently obtained excellent pricing on a £427m CMBS secured by a portfolio of UK hotels. The market though has not simply been confined to conduit deals as demonstrated by the fact that Blackstone successfully closed CMBS Pietra Nera Uno (which is apparently the first of a swathe of Agency CMBS deals that Blackstone are expected to bring to the market) and the recent market rumours that Natwest are currently in the midst of structuring a synthetic CMBS. Taken together all these transactions provide the firmest indicator yet that that the beleaguered CMBS product is firmly back in vogue.
Continue Reading The European CMBS market is positively booming!