CLUB Deal LendingClub's first self-sponsored ABS makes it less beholden to direct loan buyers.
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
www.asreport.com | @asreport
www.asreport.com | @asreport
CLUB Deal
LendingClub’s first self-sponsored ABS makes it less beholden to direct loan buyers.
July / August 2017 | Volume 17, Number 5
WILMINGTON TRUST RENOWNED EXPERIENCE | STRUCTURED FINANCE
RICK D’EMILIA PATRICIA EVANS EILEEN HUGHES PATRICK TADIE
rdemilia@wilmingtontrust.com pevans@wilmingtontrust.com ehughes@wilmingtontrust.com ptadie@wilmingtontrust.com
212-941-4414 302-636-6104 +44 (0)20 7397 3698 212-941-4407
Our experience is your advantage
for global trustee services.
At Wilmington Trust, we’ve been working with issuers since the inception of the mortgage securitization market,
and our team has deep experience as a full-service trustee for all asset classes in the securitization marketplace.
We serve clients across the country and around the world, providing the trustee and administrative services required
for ABS/MBS transactions.
For more insight on how we’ve successfully served clients on structured finance deals, contact one of our
experienced professionals or visit wilmingtontrust.com/structuredfinance.
I N D E N T U R E T R U S T E E | PAY I N G A G E N T | B A C K U P S E R V I C I N G | D O C U M E N T C U S T O DY
I N D E P E N D E N T D I R E C TO R | OW N E R T R U S T E E | TA X & AC C O U N T I N G
S E R V I C E S P R O V I D E D B Y W I L M I N G T O N T R U S T, N . A . A N D W I L M I N G T O N T R U S T S P S E R V I C E S ( L O N D O N ) LT D .
Wilmington Trust is a registered service mark. Wilmington Trust Corporation is a wholly owned subsidiary of M&T Bank Corporation. Wilmington Trust Company, operating in Delaware only, Wilmington Trust, N.A.,
M&T Bank and certain other affiliates, provide various fiduciary and non-fiduciary services, including trustee, custodial, agency, investment management and other services. International corporate and institutional
services are offered through Wilmington Trust Corporation’s international affiliates. Loans, credit cards, retail and business deposits, and other business and personal banking services and products are offered by
M&T Bank, member FDIC.
©2017 Wilmington Trust Corporation and its affiliates. All rights reserved.
CONTENTS
6
Club Deal
LendingCLub’s first
self-sponsored ABS
makes it less beholden
to direct loan buyers.
By Allison Bisbey
ABS MBS
10 Spreading it thin 18 Container rebound 22 Pari passu pileup
There are few good options Lessors are returning to the A decline in CMBS deal sizes
when loan investors are forced to securitization market as a pickup means even not-so-large loans
accept lower rates or take their in global trade boosts both con- are being split up into collateral
money back. tainer prices and lease rates. for multiple transactions.
12 SEC unmoved 20 Retail shakeout 24 Housing reform redux
Even under Trump, the agency Card companies may soon share Despite moves toward a biparti-
remains opposed to relief for CLO the pain felt by traditional retailers san solution, the political atmo-
managers from risk retention. as more consumers shop online. sphere in the Senate remains
hyperpartisan.
14 Second act for Trinitas
Risk retention created opportuni- 20 Flood insurance revamp
ty for the CLO manager, but also The House passed five bills in
spurred its sale to Pine Brook. June, but a key housing market
group objects to part of the
16 VW’s securitization shift package.
The automaker is likely to reduce
ABS issuance now that it can
issue unsecured debt again.
Reproduction or electronic forwarding of this productis a violation of federal copyright law! Site licenses are available — please call Customer Service 212.803.8500 or help@sourcemedia.com
Subscription Information: help@sourcemedia.com | 212.803.8500; Bulk subscription | US/Canada $2,995 | Annual Rate (8 issues) International $3,035
Asset Securitization Report - (ISSN # 1547-3422) Vol. 17, No. 5, is published 8 times a year by SourceMedia, One State Street Plaza, 27th Floor, New York, NY 10004. Postmaster: Send address changes to Asset Securitization Report,
SourceMedia, One State Street Plaza, New York, NY 10004. For subscriptions, renewals, address changes and delivery service issues contact our Customer Service department at (212) 803-8500 or email: help@sourcemedia.com.
All rights reserved. Photocopy permission is available solely through SourceMedia, One State Street Plaza, 27th Floor, New York, NY 10004.
For more information about reprints and licensing content from Asset Securitization Report, please visit www.SourceMediaReprints.com or contact PARS International Corp. (212) 221-9595. Asset Securitization Report is a general-
circulation publication. No data herein is or should be construed to be a recommendation for the purchase, retention or sale of securities, or to provide investment advice of the companies mentioned or advertised. SourceMedia, its
subsidiaries and its employees may, from time to time, purchase, own, or sell securities or other investment products of the companies discussed or advertised in this publication.
©2017 Asset Securitization Report and SourceMedia, Inc. All rights reserved.
July / August 2017 www.asreport.com 3
One State Street Plaza, 27th Floor, New York, NY 10004
Editorial
Editor in Chief: Allison Bisbey
allison.bisbey@sourcemedia.com; 212.803.8271
Senior Editor: Glen Fest
glen.fest@SourceMedia.com; 817.847.8041
Associate Art Director: Neesha Haughton
neesha.haughton@sourcemedia.com; 212.803.8815
Contributors
Brian Collins, Ian MacKendry, Kevin Wack
Group Editorial Director, Banking & Capital Markets
Richard Melville
richard.melville@sourcemedia.com; 212.803.8679
VP, Content Operations and Creative Services: Paul Vogel
paul.vogel@sourcemedia.com; 212.803.8832
Director of Creative Operations: Michael Chu
michael.chu@sourcemedia.com; 212.803.8313
Director of Content Operations: Theresa Hambel
theresa.hambel@sourcemedia.com; 212-803-8245
Publishing
VP Capital Markets Division: Harry Nikpour
212.803.8638
Vice President of Sales, Banking & Payments: Dennis Strong
212.803.8372
Associate Publisher: Louis Fugazy
212.803.8773
Marketing
Marketing Manager: Raquel J. Lucas
212.803.8322
Chief Executive Officer: Douglas J. Manoni
Chief Financial Officer: Michael P. Caruso
Chief Revenue Officer: Marianne Collins
EVP and Chief Content Officer: David Longobardi
Chief Product & Audience Officer: Minna Rhee
Chief Marketing Officer: Matthew Yorke
SVP, Conferences: John DelMauro
SVP, Human Resources: Ying Wong
4 Asset Securitization Report July / August 2017
EDITOR’S LETTER
The Big Deal
There’s no mistaking the significance of the acronym for LendingClub’s new securitization shelf, Con-
sumer Loan Underlying Bond (CLUB) Credit Trust 2017-NP1. It’s a true “club” deal, in the sense that a
few, select investors in Lending Club’s loans were invited to contribute collateral. Yet the term is more
commonly associated with Wall Street than with Silicon Valley.
Previously, LendingClub acted purely as a matchmaker, connecting lenders and borrowers over its
platform. Investors who funded these loans and wanted to turn around and resell them as collateral
for bonds were left to their own devices. In the words of Todd Baker, it was the “poster child” for the
idea that this pure sales model was workable.
Now the company recognizes that providing investors with programmatic access to the capital
markets can broaden its investor base and reduce its long-term funding costs.
Plenty of other companies are taking advantage of demand for floating-rate assets to lower their
funding costs in the unsecured debt markets; an article by Glen Fest looks at the problems this cre-
ates for CLO managers.
In a separate article, Glen checks in with Trinitas CEO Gibran Mahmud, who just completed a
spinoff from Triumph Bancorp, landing at a firm with much deeper pockets, Pine Brook.
Glen also writes about the rise in demand for shipping containers, which is allowing leasing
companies to return to the securitization market after a long dry spell. They’re benefitting from both
higher lease rates and stronger container prices.
One company that’s likely to be driving by the securitization market less often is Volkswagen,
which has made some strides since the emissions cheating scandal broke late in 2015 and finds itself
back in favor with investors in unsecured debt.
In the commercial real estate market, it’s becoming increasingly common to carve big loans up into
pieces that can be used as collateral for multiple deals; it’s a practice that may be unavoidable, given
the smaller sizes of CMBS conduits but has some downsides.
And Brian Collins of sister publication National Mortgage News talks to key housing market groups
about their objections to a provision of a flood insurance bill passed by the House Financial Services
Committee.
—Allison Bisbey, Edito in Chief
July / August 2017 www.asreport.com 5
6 Asset Securitization Report July / August 2017
Club Deal
LendingCLub’s first self-sponsored ABS makes it less beholden to
direct loan buyers.
By Allison Bisbey
LENDINGCLUB’S FIRST SECURITIZATION
of its own consumer installment loans
is an important step in rebuilding its
business following a scandal last year consistent with the asset-light ap-
over its corporate controls. proach of Silicon Valley darlings (Uber
The company has been seeking owns no cars), gave loan investors too
to broaden its funding sources after much pricing power.
concerns about the integrity of its data Now LendingClub is allowing multi-
caused many investors to pause or ple investors to sell their loans back to
scaled back their purchases. Lending- a securitization trust that it sponsors,
Club originally acted purely as a match- a move that increases economies of
maker, connecting borrowers with scale and ensures some uniformity in
lenders over its platform. It did not hold the bond offerings. The inaugural $279
on to the loans. Investors who funded million deal, backed exclusively by
these loans and wanted to turn around subprime consumer loans, closed last
and resell them as collateral for bonds week.
were left to their own devices. “By leading this securitization, we
That meant the company had no were able to show that we’re commit-
control over how these deals were ted, control the process and deliver
structured, or when they came to mar- an enhanced experience for new and
ket — even though the transactions’ existing investors that buy through our
performance could affect its reputation. platform,” said Valerie Kay, senior vice
Moreover, LendingClub’s original model president and head of the institutional
of relying exclusively on loan sales and investor group at LendingClub. “We
not using the firm’s balance sheet, while want to control our brand, promote li-
quidity and provide access to the capital
markets to investors.”
Kay is part of a new finance team
brought in since CEO Scott Sanborn
July / August 2017 www.asreport.com 7
took the helm last June. She spent completed its inaugural securitization However, a wholesale-based funding
more than 25 years on Wall Street, with within days of LendingClub’s. mix still leaves LendingClub vulnerable
stints at Morgan Stanley and Prudential Other marketplace lenders, includ- to market disruptions and to the credit
Securities. ing Avant and Social Finance, have com- performance of the loans underlying
By sponsoring its own securitiza- pleted multiple securitizations of loans the asset-backed securities, Baker
tions, LendingClub is also taking skin in made on their respective platforms and cautioned.
the game, in the form of the 5% econom- sold to investors. LendingClub, once the nation’s
ic risk it must hold in order to satisfy Still, “LendingClub was the poster leading online lender, is in a stronger
risk retention rules that took effect last
December.
In the past, LendingClub played a Funding mix
supporting role in securitizations of LendingClub is broadening and diversifying its investor
its loans by buyers, talking to potential base; data as of fourth quarter 2016
bond investors and rating agencies,
even if it did not have any control over
Oth
er i
the deals, Kay said.
nst
“After supporting a few securitiza-
itut
ion
tions, we understood that investors and
s, 1
Ret
rating agencies would value Lending-
ail, , 43%
3%
13% agers
y man
Mone
Club having skin in the game,” she said.
“We believe in what we do here, and we
1%
want to broaden the base of investors
3
s,
that have access to our product. If you
nk
Ba
add all that together, securitizations
make sense.”
The company has started to retain
Source: Kroll Bond Rating Agency
a small portion of loans on balance
sheet, according to research published
by Kroll Bond Rating Agency, although child for the idea that a pure [sales] position than some of its peers, having
it did not hold or contribute any of the model was workable,” said Todd Baker, raised significant equity when times
collateral for the inaugural deal. a senior fellow at Harvard’s John F. Ken- were good. It currently has $534.5
“We have this whole ecosystem to nedy School of Government. “It’s pretty million in cash available for immedi-
support: our investors, their warehouse much been proven not to work.” ate liquidity, as well as $120 million of
providers … some investors might be The problem with the marketplace unused capacity on a revolving line of
looking to do structured products,” Kay model today is that the investors know credit that expires in December 2020,
said. “We hope to help promote liquid- the lender has to sell — it has no choice, according to Kroll.
ity with potential programmatic access Baker said. “The only leverage the lend- The company trimmed its losses
to the capital markets.” er has [in determining pricing] is what to $29.8 million in the first quarter,
The shift to what’s known as a hybrid other investors are out there.” less than in each of the previous three
model of both selling whole loans and The shift to securitization creates a quarters.
securitizing them is hardly revolu- degree of freedom that LendingClub Other online lenders are in much
tionary. Prosper Marketplace, another can use to bring down funding costs worse shape. OnDeck Capital, an online
online lender that previously relied and get to a profit without a massive small-business lender based in New
exclusively on whole loan sales, com- increase in origination, he said. By com- York, is feeling the pinch as investors
pleted its first securitization in May. parison, under the old model, it had to continue to demand better pricing for
Upstart, a relative newcomer founded keep increasing originations to have loans. It’s now retaining the bulk of the
by several former Google employees, any chance of being profitable. loans it makes, at considerable cost.
8 Asset Securitization Report July / August 2017
This lesson was not lost on others.
“In the early days of marketplace
lending, some platforms had investors
PAYING UP PAYS OFF
sponsoring their own securitization LendingClub and Upstart went face to face in the securitization market with
shelves,” said Barry Rafferty, Upstart’s competing offerings of bonds backed by unsecured consumer loans.
head of capital markets. “Issues that The deals earned identical credit ratings from Kroll Bond Rating Agency,
arose included nonhomogeneous pools despite the fact that the prime collateral for Upstart’s deal was, by several
due to active selection and inconsis- metrics, less risky. LendingClub had to pay up for the A- on its senior notes
tently structured deals. Some of those by offering additional investor protections.
early examples have had performance This appears to have paid off.
issues.” LendingClub was able to place the notes at a spread of 110 basis points
By comparison, in Upstart’s first over Libor, according to PeerIQ, which published a report on the transac-
securitization, “we controlled our own tion.
shelf. We know the underwriting and PeerIQ called this a “milestone,” noting that it is competitive with rates
collateral, we’re able to set triggers offered by GS Bank on certificates of deposit.
appropriately and control how the deal By comparison, Upstart had to pay a spread of 125 basis points, though
is marketed and structured,” Rafferty some of the additional spread undoubtedly compensated investors for the
said. “And we offer the benefit of liquid- longer tenor.
ity and leverage to investors.” How did it LendingClub get investors comfortable with the higher risk on
Kay said that standardization of deals its nonprime collateral? One answer is the mix of investor protections.
is important to LendingClub. “We’re Bond investors in both deals benefit from the same kinds of credit
enhancement, including over-collateralization (the value of the collateral ex-
talking to a bunch of investors and
ceeds the value of notes issue), subordination (senior noteholders are first
underwriters about what that means
in line to get repaid, reserve accounts, and excess spread (the difference
for them,” she said. “There are a lot of
between yield on the collateral and yield on the notes). The difference is one
options for investors to choose from on
of degree: the senior tranche of LendingClub’s deal benefits from a total of
our platform. So, this securitization is
52.25%, compared with 44.35% for Upstart.
the first step in establishing a potential
This was necessary because Kroll expects cumulative losses to reach as
program that we hope will be consis-
high as 22% for the loans backing LendingClub’s bonds, compared with just
tent, standardized and predictable.” 15% for the Upstart collateral.
Lending Club is looking at ways to Besides credit support, investors in the senior tranches of the two deals
securitize prime loans, and that this also benefit from a feature that accelerates repayment of their principal
would likely be done from a separate should the collateral perform worse than expected. There’s give-and-take
shelf, Kay said. between the amount of subordination for the senior notes of a deal and
When marketplace lenders sponsor the trigger; in general, the higher the subordination, the more comfortable
their own securitizations, there are investors in this tranche will be with a less restrictive trigger.
benefits to ABS investors as well: the That’s what appears to have happened with CLUB 2017-NP1, which was
consistency means that they don’t have led by Citigroup and JPMorgan. Holders of the equity are providing greater
to do as much work analyzing every subordination to bond investors. Yet equity holders also benefit from a less
new deal. restrictive CNL trigger. It starts at 7% and peaks at 29%, which PeerIQ says
“They know that deals structured is the highest starting level of any recent transaction by its peer group of
from the same platform will have marketplace lenders.
similar terms,” said Rosemary Kelley, a By contrast, UPST 2017-1, structured and led by Goldman Sachs, has
senior managing director and co-head the lowest loss estimate amongst its peers, but also a tighter trigger that
of ABS at Kroll. “That’s what you see begins at 4% and peaks at 18%.
with deals from Avant, and SoFi; a deal Barry Rafferty, Upstart’s head of capital markets, said that, “controlling
from their platform is directly compa- for maturity, our execution was terrific.” He added that Upstart achieved
higher structural leverage for the equity tranche, 85.5% vs 82.5%. —AB
rable to prior deals.”
July / August 2017 www.asreport.com 9
ABS REPORT
Loan Refis Hitting CLOs Hard
Managers who accept lower interest payments on loans risk running afoul of deal cove-
nants; but if they take their money back, there are few attractive places to put it to work.
By Glen Fest
Corporate America’s refinancing boom
is creating major headaches for some of Slim pickings
its biggest lenders, collateralized loan Strong demand and the slow pace of new issuance is making it easy for
obligations. corporate borrowers to reduce interest ratest
Leveraged loans are in high demand
because they pay floating rates of inter- New Money Refi
est and tend to perform well in a rising 100
rate environment. Since few companies
80
are taking out new loans, borrowers
are able to demand lower interest rates 60
from existing lenders.
$B
This puts CLO managers in a bind: 40
If they accept lower interest payments,
20
there will be fewer funds available to
service their own debt. They also risk 0
running afoul of other portfolio metrics Jan '17 Feb '17 March '17 April '17 May '17
intended to protect investors.
Source: Thomson Reuters LPC
Allowing borrowers to repay them
early isn’t a great option either, since
there are few attractive places to put the for repayment of the principal of senior As of May, 20 of 278 CLOs rated by
money back to work. notes issued by CLOs and of distribu- Fitch and issued from 2014 to 2016 were
CLOs investing in Regal Cinemas, for tions to holders of the most subordinate failing their weighted average spread
instance, have endured three refinanc- securities issued in these deals, known tests. Another 140 CLOs, representing
ings of a $954 million loan that has been as the equity, Piedra added. 50% of the agency’s rated universe, have
refinanced three times since May 2016. All told, some $300 million senior a cushion of less than a 10 basis points
This has resulted in a cumulative reduc- bank loans have been refinanced so far left before breaching their deals’ mini-
tion of 75 basis points in the spread that this year. As a result, the weighted aver- mum spread compliance.
the loan pays over Libor to 200 basis age spread (WAS) on U.S. CLOs, or the Compounding their stress, CLO man-
points from 275 basis points originally. difference between the yield on loans in agers are finding it difficult to take any
“The loan market is refinancing at a portfolio and the cost of debt issued action that would boost spreads. The
a significant pace that I haven’t seen to fund the purchase of the loans, has supply of higher quality loans is so lim-
since 2006,” said Eddy Piedra, vice fallen substantially. It stood 3.75% in ited that they must trade down in credit
president of leveraged loans for 40/86 May, down nearly 50 basis points (from to find additional yield. Yet buying
Advisors, an affiliate of CNO Financial 4.72%) from the same period a year riskier loans can jeopardize a portfolio’s
Group that both manages and invests earlier, according to Fitch Ratings. compliance with other covenant tests,
in CLOs. A significant number of CLOs are including asset quality.
“It’s definitely having pressure on now falling short of minimum WAS Mike Herzig, managing director at
excess interest,” which is needed both levels stipulated in deal documents. THL Credit Advisors, likens striving for
10 Asset Securitization Report July / August 2017ABS REPORT
balance between risk and spreads to issuance to a record $800 million, an the needle on spreads takes a lot of
squeezing a water balloon – containing increase of $250 million from the level trading in the portfolio.”
one problem only manages to exacer- it was calling for in January. It expects According to Fitch, over 92% of
bate another. just $300 million of this to be new managers of 2014-2016 vintage CLOs
“You cannot do it all,” he said. “You’re issuance. have chosen to adjust for spread
going to have to sacrifice somewhere.” CLOs aren’t the only ones looking for tightening by tweaking the cushions on
The problem is most acute for CLOs places to put their money to work. With their diversity or average ratings factor
printed in the past couple of years. interest rates headed higher, money is scores that measure, respectively, their
Managers of deals that have exited their flowing into the loan market from other issuer and industry concentrations and
non-callable periods (typically two sources including retail mutual funds the percentage of lower-rated assets in
years) can themselves refinance, forc- and exchange-traded funds. Loans are their portfolios.
ing their own investors to accept lower now changing hands in the secondary “Managers face a tough decision,”
interest payments.
However, some older CLOs grand-
fathered from risk retention require- “Managers face a tough decision:
Do I go down in quality and keep
ments risk triggering compliance if the
refinance. (It is possible, under certain
circumstances, to refinance older deals
without triggering compliance, but only
my spread high?”
once.)
The consequences for deals that market at a premium to par, or face val- Herzig says. “Do I go down in quality to
flunk covenant tests are often “main- ue. The percentage of leveraged loans keep my spread high?”
tain and improve” trading restrictions, trading above 100 cents on the dollar While THL is not prepared to make
which limit managers to acquiring reached 74% in February, though it has this tradeoff, THL’s Herzig added,
new collateral that remedies a failed retreated to a three-month low of 62.6% “we’ve seen a lot of managers choose
(or nearly failed) test. In some cases, as of June 20, according to JPMorgan. the former, and we’re in a benign credit
managers may be prohibited from ac- But either compares unfavorably to the environment, so maybe it’s fine. They
quiring additional loans until the test is 2% of leveraged loans traded above par can junk up the portfolio a bit and buy
satisfied, according to Wells Fargo. in February 2016. stuff with a little more yield.”
Things can only get worse. CLOs that fail portfolio tests can Loan refinancing is putting CLOs out
Wells Fargo estimates that another apply one of two fixes: They can acquire of compliance with yet another cove-
$191 billion of loans will exit their non- new collateral, or commit future rein- nant called weighted average life (WAL),
call periods and be refinanced by the vestments to adjustments in a portfo- which measured the average time that
end of August. That will not only place lio’s asset quality “matrix” – a combined it takes a dollar of principal to be repaid
more lower-yielding assets into the measurement of spreads, collateral on a deal. That’s because refinancing
market, but introduce declining credit diversity, combined average ratings and typically involves extending the term of
quality into the mix as firms with shaki- recovery ratings. a loan, in addition to lowering the inter-
er credit find easier access to capital. In this matrix, a manager wanting to est rate. Wells Fargo reckons that 55%
Wells Fargo thinks the continued run boost spreads by acquiring riskier as- of 2012-2013 vintage CLOs are failing.
of refinancings and repricings could sets could make changes to the diversity Another 12% of 2014 vintage CLOs are
shrink average WAS levels another 14 or the average pool ratings factor, so also failing, while another 34% of this
basis points with CLOs by the end of long as the cushions in those areas pro- vintage has a WAL cushion of less than
summer, putting CLO managers under tecting investors are not breached while 0.25%.
additional pressure. gaining the higher average spread. CLO managers respond to failing
JPMorgan has a similar view. In This is the choice many managers are WAL tests by purchasing shorter-dura-
June the investment bank boosted its making, said Piedra. “A lot of managers tion loans, but this, too, typically has a
forecast for full-year leveraged loan are pretty well diversified, so to move negative impact on asset quality.
July / August 2017 www.asreport.com 11ABS REPORT
SEC Still Unsympathetic to CLOs
Despite the Trump administration’s anti-regulatory stance, the Securities and Exchange
Commission remains opposed to relief from risk-retention rules.
By Glen Fest
The Trump administration’s anti-reg- The agencies’ stance might seem puz- erly covered as “securitizers” under
ulatory agenda has yet to permeate the zling, given the deregulatory stance of the risk-retention requirements, in
Securities and Exchange Commission, SEC Chairman Jay Clayton. But revers- contrast to the LSTA’s argument that
which remains opposed to relief for
collateralized loan obligations.
Hoping for a more sympathetic ear, “The LSTA makes two arguments
in support of its efforts to insulate
the Loan Syndications and Trading
Association wants to reinstate a federal
lawsuit that seeks to overturn, or at
least modify, ‘skin-in-the-game’ rules
CLO managers... Both fail.”
for CLOs.
Federal regulators aren’t buying it. ing Obama-era SEC or Fed positions is CLO managers fall outside the law’s
In a response brief filed June 7 the neither quick nor easy. Clayton has not definition because they do not own or
D.C. Circuit Court of Appeals, the been at his job long, and the Fed lost a transfer assets.
Federal Reserve and the Securities and forceful voice in regulatory policy after “LSTA is able to reach the oppo-
Exchange Commission jointly argued the resignation of Fed Gov. Daniel Ta- site conclusion only by divorcing the
that the court should uphold a lower rullo in April.(In July, President Trump statutory language from its context
federal district’s Dec. 22 dismissal of nominated former Bush administra- and by adopting a highly restrictive
the 2016 lawsuit. tion Treasury undersecretary Randal reading of the term ‘transfer,’” the brief
“LSTA makes two arguments in Quarles to the top bank supervision states. “This strained reading of the
support of its effort to insulate open post on the Fed board). statute’s text is at odds with its purpose
market CLO managers from Congress’s In addition, much of the staff that and would operate both as an unstat-
risk retention mandate,” reads an argu- helped draft the rules at the SEC ed exemption from the risk retention
ment summary in the 100-page filing. and elsewhere are still in place, and requirement for open market CLOs and
“Both fail.” “running on inertia” from the previous as a loophole to be exploited by other
The brief comes after the LSTA filed administration’s policies, according to types of securitizers.”
to resurrect the suit at the appeals Ganz. “They haven’t gotten new orders, The agencies also rejected the LSTA’s
court level. The D.C. appeals court is so they keep going,” he said. argument that risk-retention should
the same body which had remanded Since filing suit in early 2016, the only apply to the credit risk in a deal,
the case to the district court level over LSTA has sought to either vacate the rather than the fair-market notional
a year ago, after the trade group made rules or modify their application to value of an entire securitization,
a long-shot effort at an early favorable CLOs. The group has primarily sought, “The agencies linked risk-retention
ruling from the higher court. through regulatory rule-making or leg- to a percentage of the economic value
Elliot Ganz, general counsel for the islative proposals, a “qualified” exemp- of the securitization as a method to en-
LSTA, said the trade group planned to tion for CLOs similar to one available sure sufficient exposure to credit risk,”
file its answer to the SEC/Fed response, for residential mortgages. the brief states, “and that approach was
after which a three-judge panel would In the brief, the SEC and the Fed entirely permissible, perfectly rational,
be selected for oral arguments. argue that CLO managers were prop- and neither arbitrary nor capricious.”
12 Asset Securitization Report July / August 2017SUBSCRIBE TODAY
www.structuredfinancenews.com
Asset Securitization Report provides a
full range of news, people coverage, www.asreport.com | @asreport
analysis and expert commentary, as well
as a weekly aggregation of Wall Street’s Common
securitization research. Platform
Fannie and Freddie
are making big changes
in the way they
securitize and transfer risk
REGISTER TODAY TO
ENJOY THESE BENEFITS:
• Unlimited premium content online Jan/Feb 2017 | Volume 17, Number 1
• Searchable access to articles in our
comprehensive archives
• Our proprietary people database on
the top players in the structured
finance world
For more information please contact
Customer Service at
212-803-8500 or
help@sourcemedia.comABS REPORT
Risk Retention as Opportunity
Triumph Capital Advisors doubled its business by acquiring Doral Bank’s CLO assets; skin-
in-the-game rules also spurred its spinoff to deep-pocketed Pine Brook.
By Glen Fest
Four years ago, Gibran Mahmud took a April. That’s what drove TCA and bank
chance on the little guy. company management to seek out a pri-
At the time, he was head of struc- vate-equity buyer, New York investment
tured products and a senior portfolio firm Pine Brook Partners.
manager at Dallas-based Highland The spin-off closed in June, with
Capital Management – then, as now, the Mahmud moving over as chief execu-
largest U.S. CLO manager in terms of tive and Pine Brook supplying a $250
assets. But in March 2013, he moved to a million line of equity. Simultaneous to
much smaller Big D firm, Triumph Ban- the acquisition was the launch of the
corp. With Mahmud’s help, the commu- $717 million Trinitas VI, the largest deal
nity bank launched a CLO business, Tri- to date on the platform.
umph Capital Advisors, issuing three Mahmud sat down with ASR to share Gibran Mahmud
deals from its Trinitas shelf platform in his views on regulation and how it is
2014 and 2015. Then, in March 2015, the playing out in the CLO market. So a long story short, it didn’t make
company more than doubled its assets sense to be underneath a bank holding
under management by acquiring two What drove the spinoff? company anymore.
existing CLOs in an FDIC auction from We were a subsidiary of a bank hold- The way we got in touch with Pine
the failed Doral Bank of Puerto Rico. ing company, which, given all of the Brook is that they are a very well
But while risk retention created some regulation and capital requirements, is known, well-renowned private equi-
opportunities, both Gibran and Tri- not great for an asset management com- ty firm with a very specific focus on
umph Chairman Aaron Graft also saw a pany. There are a ton of banking rules energy, oil and gas and financials, so as
problem with their original strategy to that do not necessarily apply to an asset we were surveying potential partners
diversify the small commercial lender manager or a CLO manager, and that out there, their stellar reputation along
with a supplemental, fixed-income makes capital spending from the bank with the fact they are very focused on fi-
business. There was no practical means difficult. nancials, understand our markets, and
for a $2.6 billion-asset community bank Overlaying all of that are the risk re- connections to potential investors to us
to retain a 5% capital stake in any new tention rules. If we stayed underneath and our L.P.’s, was extremely attractive.
TCA CLO, so in 2015 they established the bank holding company and used any
a separately run capitalized vehicle – bank or bank holding company capital, Any new strategies?
Trinitas Capital Management – through each CLO would have had to be con- Not really any changes that come to
which TCA management launched its solidated on to the holding company’s mind. The CLOs we put together are the
fourth and fifth CLOs. balance sheet. For example, in this last standard cookie-cutter, down the mid-
Even as an off-balance sheet transaction [closed in June], we put on dle of the fairway-type of CLOs where
business, running CLOs through a $700 million in assets and $630 million you have 12 years of locked-in financing
third-party entity outside the bank in liabilities, which would have thrown and floating risk on both sides. The only
structure was “unpredictable at best the bank holding company ratios all out way to mess them up is stretch for yield,
and impractical at worst,” Graft told an- of whack and make the balance sheet of which you don’t need to do in a CLO be-
alysts in a first-quarter earnings call in the bank holding company worthless. cause the structure is a 10-times levered
14 Asset Securitization Report July / August 2017ABS REPORT
vehicle. The return is built in it for you pen, they would not go all the way back need to have as much capital deployed
as long as you don’t mess it up. to zero. as the rules currently stand today.
I think it just gets scaled back on We on the other hand, like to take
How is loan market volatility perhaps the percentage that’s required majority equity pieces of our CLOs –
affecting deals? to be held, how you can finance it or one, for the control, two, to have the
The loan market has its ups and where the recourse can go. retention as well.
downs. But currently, what we’re It doesn’t really affect us; we’re
presuming is we are in a tightening How would investors react to a going to be dual-compliant regardless
environment. That’s what we did in this repeal of risk retention? because we are already taking the
last deal [Trinitas VI]. We priced it in From the mid-90s through the early requisite amount of equity. We have the
May [closed in June] and assumed loans 2000s, even through 2014, we lived ability to do vertical, but we just like the
would tighten up. without even the concept of any reten- horizontal better.
We’ll take that into account on a
forecasting basis. The fact you’re buy-
ing this loan today, it’s a known issue, “[Pine Brook] understands our
markets, and connections to inves-
and it’s a Libor plus 350 [basis points]
coupon – but in six months it’s going to
drop to 325, that doesn’t really change
our credit decision.
tors was extremely attractive.”
What are the odds of repealing tion [for CLOs]. So I think the market What is your outlook for the
Volcker and risk retention? has already accepted a non-retention rest of 2017?
For the CHOICE Act [which would environment. Going forward, newer, We believe borrowers are still per-
repeal Volcker], the biggest benefit is smaller managers could get somewhat forming, the structures look good, and
probably indirect, in that it expands of a benefit by saying “I have my skin in the checks from private equity sponsors
the buyer universe for CLOs and allows the game with you as well.” are sizeable. The worse thing out there
banks to go down further in the capital But if retention were to be repealed, is that spreads are pretty tight.
structure to invest in the mezz and I don’t think that would be something Issuance-wise, I don’t see any slow-
potentially the equity. CLO market investors would then force down outside of the usual August/Labor
Potentially, you’d be able to add without the regulation on the market. Day slowdown period we usually have.
things like securities, bond baskets, Or at least I don’t think it would be Everybody’s pipelines are full and the
or structured product baskets within broad-based. ratings agencies are pretty busy.
CLOs, but likely a very small portion Now you’re rolling into the time
given that you still have a rating agency Will Trinitas maintain its dual frame where the 2015 transactions
construct on top of it. So maybe a 5% to compliant strategy? are coming up, and those will require
7.5% [securities] basket comes back into The regulators in Europe said 5% [risk retention or some sort of capital outlay
CLOs. I don’t see that as a huge benefit retention] is fine, but they left open also if you’re trying to refinance or reset
or detriment; it will just be manag- the ability to change that in the future. those. So I think from that perspective
er-by-manager who decides that this So it’s not a ton of comfort. But if the you’ll see a little bit of a slowdown from
particular bond is a good value, or bet- U.S. rules get pulled back, if and when the extreme amount of volume we saw
ter than some loans out there. Likely, if they do, we’ll likely see Europe not in the first half of this year.
it were us, we would like the flexibility pushing much beyond. The biggest factor for new issue in
of having the basket but wouldn’t use it What we have seen in the market is my opinion will be the access to the un-
unless the market changed. a bunch of U.S. managers have decided derlying loans. I think liability spreads
As it relates to risk retention rules, they aren’t necessarily going to try to will be tight, and we’ll see a healthy
I foresee a repeal of the risk retention do dual compliant deals. Because if the amount of issuance throughout the rest
rules as unlikely. If they were to hap- U.S. rules are pulled back, you don’t of the year.
July / August 2017 www.asreport.com 15ABS REPORT
Volkswagen Shifts Gears Again
The automaker stepped up issuance of asset-backeds last year in the wake of an emissions
cheating scandal; now it’s returning to the unsecured debt markets
By Allison Bisbey
Volkswagen was compelled to shift its
funding strategy last year in the wake
of an emissions cheating scandal. It
stepped up issuance of asset-backeds,
which were less impacted by the fallout
than the company’s stocks and unse-
cured debt.
Now that investor confidence has
been restored, VW is returning to its
traditional funding pattern. In June, it
issued €3.5 billion of hybrid unsecured
bonds for the first time in 18 months.
“The highly successful placement is
Photo Credit Bloomberg News
evidence of our good standing on the
capital market, despite a longer pause
in our issuance,” Frank Fiedler, CFO of
Volkswagen Financial Services, said in a
June 29 statement.
The company has no plans to pull
back from the securitization market, the fiscal year ended March 31, 2015. Moreover, VW diesel vehicles re-
however. While the cost of unsecured debt tained their relative value against other
“The refinancing of Volkswagen funding has now fallen, “it is the securi- manufacturer diesel vehicles, despite
Financial Services is carried out on ty of the funding that counts for us and the fallout from the emissions crisis. So
the basis of strategic diversification,” not the last spread point,” Siedler said. even when consumers stopped mak-
spokesman Marc Siedler said in an “Volkswagen Financial Services are a ing payments and the vehicles were
email. “In addition to Auto ABS trans- frequent ABS issuer; we do not plan repossessed, they fetched a good price
actions, deposits from the stable direct change our frequent issuance pattern.” at auction.
banking business and the money and VW was able to continue accessing However, Moody’s is concerned that
capital markets are the most important the securitization market at low cost values for used diesel cars of all brands
elements in the refinancing mix.” because consumers kept making timely could come under pressure as local
Siedler said that during the fiscal payments on their loans and leases as governments across Europe take ac-
year ended March 31, 2016, bonds the manufacturer recalled thousands tions that make it less attractive to own
backed by auto loans and leases of diesel vehicles to bring them up to and operate them. This did not have a
accounted for 19% of Volkswagen’s regulation. In a June 28 report, Moody’s measurable impact on sales in 2016, but
funding mix. This figure includes bonds noted that the delinquency rate of VW the rating agency expects to see a larger
backed by U.S. vehicle financing and deals it rates has remained “consistent- decline in the proportion new diesel ve-
European vehicle financing. That was ly low” in Germany, Spain, France and hicles sold in 2017. This shift will likely
up four percentage points from 15% for the U.K. be echoed in the used car market.
16 Asset Securitization Report July / August 2017STAY UP TO DATE
Asset Securitization Report’s unique feed of deal analysis
and data supports a community of professionals who
structure or invest in asset-backed transactions.
Follow Asset Securitization Report
on Twitter for the latest news from
the structured finance industry.
@asreportABS REPORT
Surge in Container Demand
A shakeout in the shipping industry reduced capacity; now that business is picking back up,
lessors are returning to the securitization market for financing
By Glen Fest
Global trade is growing, but few ship-
ping companies are in a position to add
to their own fleets of containers, in part
because of rising steel prices. This is
pushing container leasing rates higher,
making it feasible for lessors to access
financing in the securitization market
once again.
So far this year, four lessors, Triton,
Textainer, SeaCo SRL, and Container
Leasing International (d/b/a/ SeaCube)
have issued a total of $1.84 billion in six
deals.
Photo Credit Adobe Stock
That’s a big increase from 2016, when
a single, $140 million deal was issued.
For the past couple of years, both
shipping companies and, by extension,
container lessors, have struggled amid
overcapacity. In August, South Korea’s Container lessors are entering the recovery in a much stronger financial position
Hanjin Shipping Co., the world’s sev- than their clients, having curtailed inventory and shifted funding to revolvers.
enth largest line, filed for bankruptcy,
delaying hundreds of thousands of on averages of five-year or longer lease Growth in trade (the World Trade Or-
shipments around the world. Other terms). ganization expects 2.7% this year) isn’t
players have joined forces. In May, Moody’s Investors Service the only thing driving up the cost of
The shakeout reduced capacity, issued a stable outlook for the global containers. The cost of Chinese-made
and now that business is picking up, shipping industry, predicting a swing cordon steel, the primary composite
containers are back in demand. “The to profitability this year. Still, shipping material used for new containers, has
reason you’ve seen so many issuers is companies are not yet in a position to more than doubled since December
that the container leasing market has add to their own fleets of containers. A 2016. “Steel is roughly 50% the cost
recovered a lot in terms of both higher new unit that sold for less than $1,500 of the components in a dry freight
container price and higher lease rates,” per cost-equivalent unit (CEU) last year, container,” said Moody’s senior analyst
said Jing Xie, an analyst and director in is now commanding about $2,200 CEU, Benjamin Shih, a senior vice president
structured finance at S&P Global Rat- according to container industry offi- on the structured finance team.
ings. Last year, the lease rate for ships cials. (A standard 20-foot dry container Another cost factor was the con-
had slipped to as low as 25 cents per is considered one CEU, or a TEU – twen- version of many Chinese container
diem for 20 feet dry containers, “but ty-foot equivalent unit – meaning that manufacturers to add eco-friendly
now we’re seeing 70-80 cents,” he said. larger containers such as 40-foot units waterborne paint systems to replace
(Per-diem rates are daily rates based cost roughly double). solvent-based operations – a process
18 Asset Securitization Report July / August 2017ABS REPORT
that has slowed down production be- estimates for the remainder of the year. $19 million in the fourth quarter) and a
cause of employee training, new drying For Textainer, that fact that 83% of its bulked-up revenue-earning asset base
conditions and added quality control contracts are on long-term leases – and of $7.6 billion.
measures, Triton’s president, Simon only 7% of those are maturing in 2017 Triton gave no indication of future
Vernon, explained in the company’s – means the company is shielded from securitization plans that would build
May 11 first-quarter earnings call with interest rate reductions and is supplied on its outstanding asset-backed note
equity analysts. “This is obviously im- with enough lease receivables to have obligations totaling $1.32 billion. But
pacting the flow of new containers com- structured two securitizations so far earlier this year in fourth-quarter earn-
ing to market at present and restricting in 2017 after two years of dormant as- ings remarks, Triton chief executive
supply,” Vernon told analysts. set-backed activity. Textainer’s second Brian Sondey expressed optimism that
Container lessors, by comparison, transaction, the $500 million Textainer container demand appears to be in the
are entering the recovery in much Marine Container V Ltd 2017-2 series early stages of a significant revival.
stronger financial positions. Prior to
the rate recovery, most were able to
manage their curtailed inventory and “The leasing market has recovered
operational needs more cost effectively
through bank warehouse and revolving a lot in terms of both higher container
prices and higher lease rates.”
lines, according to S&P’s Xie. Triton,
for instance, has $1.53 billion in term
loan facilities along with a warehouse
line ($666.2 million outstanding) and a that closed on June 28, was among “These very large shipping lines,
standalone warehouse for asset-backed the largest-ever asset-backed deals in many of which now operate several
transactions ($660 million outstand- the history of this intermodal class, million TEU containers in their fleet,
ing). said Hilliard C. Terry III, Textainer’s they need very large suppliers,” he told
Several had extended five-year (and executive vice president and chief fi- equity analysts. “The major shipping
in Triton’s case, seven-year) contracts nancial officer, in a press release. “This lines don’t want to have to go to four of
with many of their clients prior to the is our second ABS offering in just two five leasing companies to put together
trade fall-off, shielding them from fur- months and follows a significant recent any particular container requirement
ther revenue strains. New and renewed improvement in the container leasing they might have.
leases now are at rates equal to peak market, coupled with strong capital “And I think that’s one reason why,
2014 levels, according to Moody’s. markets conditions,” said Terry. since our merger we’ve actually seen
Moody’s reckons that lease rates Textainer’s first deal of the year was our deal share increase just because we
climbed about 60% on average in the the $420 million Textainer Marine Con- can deliver very big solutions to these
first quarter from historical lows in tainers V Ltd. Series 2017-1, which had guys.”
2016. “If container prices continue to been upsized from $300 million, and Triton is manager of the first ship
increase,” the rating agency said in a included a five-year expected maturity. container ABS deal in 2017, the $281
May report, “per diem lease rates for The first transaction pooled 120,973 million TAL Advantage VI portfolio
both new and used containers will also containers; the second-series in the offering in March backed by 86,750
rise, which will help improve the ABS master trust-like vehicle involved over containers with a book value of $355
transactions’ flows.” 313,000 containers. million. Most recently, the company
Going into the year, many expected Triton has issued two deals, one for sponsored the $318.9 million Triton
the rates to remain flat at 2016 levels. each of the legacy container firms from Container Finance VI LLC (Series
S&P published lease assumption rates which it was created in a July 2016 2017-1) transaction featuring more than
of 57 cents per diem for the standard merger with the former TAL Interna- 97,000 containers valued at more than
20-foot dry containers, narrowly down tional Group. The transactions were $376 million – with many of them new
from the 2016 forecast of 60 cents. (The spurred from rising earnings ($35.4 fleet additions with an average age of 1.7
agency has not published any revised million in adjusted net income, up from years.
July / August 2017 www.asreport.com 19ABS REPORT
Store Closures Imperil Cards
Synchrony Financial and Alliance Data are particularly vulnerable to recent shifts in
Americans’ shopping habits, according to Moody’s Investors Service.
By Kevin Wack
Amid strong growth in online shopping,
the pain that many traditional retailers Retail shakeout
are feeling may soon be shared by their Off-price chains are aggressively adding stores, but department stores,
partners in the credit card industry. clothing retailers and office supply outlets are substantially reducing
A new report from Moody’s Investors their footprints
Service predicts that the woes now % change in locations in 2017, estimated
being felt at many retailers with large 6%
physical footprints will soon spread to
4%
the companies that issue plastic to their
customers. 2%
The near-term concern is that 0%
when particular store locations close, -2%
customers who live nearby will become
-4%
less likely to pay off their existing debts,
since they will no longer have a physical -6%
connection to the retail chain. In cases Off-price Home Grocery Drug Apparel Office Dept.
store
where a merchant liquidates its assets
Source: Moody's
in bankruptcy, the losses for the card
issuer will likely be larger, according to
the report. merchants, and private-label cards, impact to be more meaningful and
“Although consumers would damage which are only accepted at one partic- noticeable going forward.”
their credit records, many will be more ular retail chain. The latter category is Stores in shopping malls are seen by
willing to default on a card from a re- seen as likely to experience bigger loss- Moody’s as most vulnerable to the grow-
tailer without local stores because they es as a result of rising store closures. ing consumer preference for e-com-
will not expect to make future purchas- In the last two years, the percentage merce, though the firm also pointed out
es at its other locations or online,” the of private-label card loans that are at that some of the sales lost as a result of
Moody’s report states. least 60 days past due has risen from store closures will be offset by online
Two large card issuers were flagged around 3% to roughly 4%, according to purchases.
by Moody’s as being particularly vulner- Moody’s. Synchrony’s retail partners include
able: Synchrony Financial in Stamford, Jody Shenn, a senior analyst at the JCPenney, which is expected to close
Conn., and Alliance Data Systems in New York-based ratings firm, said more than 100 stores this year, accord-
Plano, Texas. Those two firms are far in an interview that it is difficult to ing to Moody’s. Alliance Data’s partners
more focused on the store-branded determine how much of that rise in late include mall staples such as Lane Bry-
card market than the other big credit payments is connected to the continu- ant, Ann Taylor and Victoria’s Secret.
card issuers are. ing retail shakeout and how much to Moody’s estimates that footwear and
The store-branded card segment other factors. apparel chains, office supply retailers
includes both cobranded credit cards, But with store closings now accel- and department stores will all shrink
which can be used at a wide variety of erating, he said, “We would expect the their footprints by at least 4% this year.
20 Asset Securitization Report July / August 2017SUBSCRIBE TODAY
www.structuredfinancenews.com
Asset Securitization Report provides a
full range of news, people coverage, www.asreport.com | @asreport
analysis and expert commentary, as well
as a weekly aggregation of Wall Street’s Common
securitization research. Platform
Fannie and Freddie
are making big changes
in the way they
securitize and transfer risk
REGISTER TODAY TO
ENJOY THESE BENEFITS:
• Unlimited premium content online Jan/Feb 2017 | Volume 17, Number 1
• Searchable access to articles in our
comprehensive archives
• Our proprietary people database on
the top players in the structured
finance world
For more information please contact
Customer Service at
212-803-8500 or
help@sourcemedia.comMBS REPORT
Carving Up Large CMBS Loans
The trend of putting ever-smaller pieces of the same commercial mortgages into multiple
deals requires investors to be extra careful, and will make workouts more complicated.
By Allison Bisbey
Risk-retention and other regulations
under the Dodd-Frank Act have led to Piece by piece
subtle but significant changes in the The number of commercial mortgages that are securitized in bits (rather
way commercial properties are fi- than the whole loan going into one deal) is rising
nanced in the securitization market.
Large trophy office buildings, shop- Loan Count
600
ping malls and hotels are typically fund-
ed in this market because the exposure 500
would be too big for any one bank or 400
insurance company. Their size dictates
that these mortgages either serve as 300
collateral for a single bond offering or
200
be split into multiple notes collateraliz-
ing two or more transactions on a pari 100
passu, or equal-footing, basis.
0
But the Dodd-Frank rules increased
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
the cost of funding, resulting in lower
Source: Trepp LLC (2017 figure is through May 16)
overall issuance of commercial mort-
gage-backed securities, as well as a
decline in the average size of CMBS passu issuance is that when these loans The problem is acute for investors
deals backed by multiple loans, known go bad, as some surely will, workouts buying a lot of CMBS in a short time.
as conduits. will inevitably be more complicated “If there’s a deal with a portion of a
As a result, even some not-so-large than they would be for a whole loan. large loan, maybe the next five deals
loans are increasingly being carved up In the meantime, pari passu loans are going to have exposure to that loan
into smaller, bite-size pieces. Last year, have become so endemic that investors as well. So you have to be particular-
$26 billion of loans tracked by the credit putting money to work in more than ly careful,” Walters said. “But if you
rating agency DBRS were split into close one CMBS conduit need to pay close at- buy one deal now and then wait a few
to 500 pieces and bundled into collater- tention, lest they end up placing bigger months to buy another, the likelihood
al for various mortgage bonds. bets than they want. is that the rest of the loan will already
“It used to be there was no prob- “When a large loan is spit into so have been put into other deals.”
lem putting a $100 million loan into a many deals, you can easily end up with In one example, a $325 million mort-
conduit,” said Erin Stafford, a managing too much exposure to that property gage on the Fresno Fashion Fair Mall, in
director at DBRS. “But the average con- when you buy tranches of several Fresno, Calif., was split into six notes,
duit transaction is now around $1 bil- conduits,” said Teresa Walters, a vice ranging in size from $39 million to $80
lion,” limiting the size of loans that can president in portfolio management at million, placed in as many conduits
be used as collateral without increasing Amundi Smith Breeden. “In some re- between October 2016 and March 2017,
concentration risk of a given pool. cent transactions, more than half of the according to DBRS. The loan, which the
One problem with the trend of pari top 10 loans are pari passu loans.” property owner Macerich Co. obtained
22 Asset Securitization Report July / August 2017You can also read
