The conduit market does not absorb a lot of bandwidth in my day-to-day practice; I’m more of a CRE/CLO/warehouse/SASB/new products/innovation sort of guy. But it’s painful to watch this marquee capital markets product wither away, a product that transformed $200 billion of mortgage loans into securities in a single year. That biz might limp over … Continue Reading
Folks, last week I made the point that it’s extremely important to confront negative narratives about our industry before they take hold, creep into the interstices between things that are true and then somehow ossified into received wisdom. So, taking on board my own advice, which shockingly I find compelling, I want to sound the … Continue Reading
Beany & Cecil was a cartoon. The Current Expected Credit Loss accounting rules, better known as CECL, which the FASB is insisting will go into effect at the beginning of next year for publicly traded banks and lenders and a year later for all other GAAP reporting entities is not. Now, heaven forfend that I … Continue Reading
On March 15, the day the Japanese Financial Services Agency (the “JFSA”) published its final risk retention rules, Dechert’s CLO team published an OnPoint discussing the new final Japanese risk retention rules and their impact on the CLO market. … Continue Reading
We’re all just back from CREFC and the mood was broadly constructive. (Don’t you love that word, “constructive”? When did “constructive” become a fancy way to say “good”?) We all went to South Beach this year wondering where the investors were, wondering whether the market was okay and wondering whether December was a blip or … Continue Reading
In February, the D.C. Court of Appeals ruled in The Loan Syndications and Trading Association v. Securities and Exchange Commission and Board of Governors of the Federal Reserve System, No. 17-5004 (D.C. Cir. Feb. 9, 2018) (the “LSTA decision”) that a manager of an open market CLO is not required to retain risk under the … Continue Reading
I don’t think risk retention is applicable to a direct issuance securitization. Many single asset, single borrower (SASB) transactions can be structured to avoid the need to retain risk under the Dodd-Frank Act and the attendant Risk Retention Rule. There. I’ve said it. Read on.… Continue Reading
Or maybe not. At the outset, let’s give credit where credit is due. It was gratifying to read a governmental missive on the capital markets that made sense, showed an actual grasp of how markets function and an awareness of the issues confronting capital formation. Best damn thing I ever read coming out of the … Continue Reading
A standalone securitization of a portfolio of properties closed in June. To our knowledge, this was the first transaction in recent memory done in a direct issuance format. In this case, direct issuance means that the sponsor organized the lender and the depositor as well as a borrower and crafted the loan between the lender and … Continue Reading
John Cleese, one of the great classic philosophers of the mid-twentieth century, made that inauspicious (from the perspective of the Shop Keeper) observation, “This parrot is dead!” To which Michael Palin responded that it was merely resting. (It’s better in drag and with the East Ender accent, but you get the idea.) The Parrot skit … Continue Reading
What if Dodd-Frank and Basel III were to largely go away? Eliminating Dodd-Frank has been a hobbyhorse of Representative Hensarling, the chair of the House Services Committee, for several years and has figured prominently in President Trump’s campaign talking points. But the conventional wisdom has been that any sort of transformational uprooting of the Dodd-Frank … Continue Reading
As is our tradition here at Crunched Credit, each year, about this time, we present our Golden Turkey Awards. In a year of monumentally bad surprises, we truly had difficulty narrowing our list down to only the exceptionally worthy candidates. Voters, governments and regulators sent shockwaves throughout the world in 2016, upending markets and throwing … Continue Reading
As we are just inking one of the very first pre-risk retention effective date risk retention deals (Potemkin Village anyone?), we are also seeing an increased flow of what are generically referred to as CRE CLOs. It’s time to consider how the Risk Retention Rule (the “Rule”) will apply to this growing market technology.… Continue Reading
Although registration was up this year for IMN’s 22nd Annual ABS East conference held at the Fontainebleau Miami Beach earlier this month, attendance was lower than it’s been in previous years as many industry participants decided against attending due to concerns about the recent Zika outbreak in Miami. The CLO sector, however, continued to be … Continue Reading
Your correspondent is fresh from the front-lines of the risk retention wars where great armies of lawyers, bankers and advisers are fixedly staring at each other, staring out of the redoubts of their respective defensive crouches in a complex, multidimensional chess game. All are fervently hoping against hope that something or someone does something to … Continue Reading
Dechert, together with the three other leading law firms in the CMBS securitization space, Cadwalader, Wickersham & Taft LLP, Orrick, Herrington & Sutcliffe LLP and Sidley Austin LLP, published a position paper entitled “Selected risk retention questions and answers for CMBS securitizations.”… Continue Reading
And now to return to our commentary a few weeks back about the stultifying impact of ill-thought through rules and regulations (at best) (Brexit has intervened). This is our Regulatory State which broadly attempted to pick winners and losers and modify market behavior, to get an engineered outcome by using the blunderbuss of proscriptive rules … Continue Reading
The slow start to 2016 did not dampen the enthusiasm at CREFC’s Annual Conference, held last week in New York City. The conference saw record attendance, with standing-room-only crowds at virtually every panel. As with the Industry Leaders Conference in January, the hot topics on people’s minds were risk retention (and the rest of the … Continue Reading
With apologies to George Dangerfield, who published The Strange Death of Liberal England in 1935 chronicling the collapse of the British Liberal Party prior to World War I, I’m borrowing his title for this commentary. Okay, bear with me. Regrettably, we may be witnessing something happening to our banking system which is somewhat reminiscent of … Continue Reading
On June 6, 2016, the Rapporteur of the European Parliament released a draft legislative resolution to modify EU Risk Retention. The stated goal of this draft is to promote “Simple, Transparent and Standardized” (STS) securitization. Since STS securitization assets must be fully self-liquidating, commercial real estate (CRE) is again left out in this proposal; not including … Continue Reading
We thought it would be useful to give a quick, interim update on the slow-motion train wreck that is our industry’s response to the upcoming effectiveness of the Risk Retention Rule. For those of you who have been blessedly snoozing under a rock these past couple of years, the Risk Retention Rule becomes effective on … Continue Reading
Over the past few years, the ABS Vegas conference has been the place for industry participants to congratulate each other on a job well done (most recently on a record-setting 2015 for CLO primary issuance), meet-and-greet with clients and generally unwind, making sure to sprinkle a few “important” meetings across the three-day span. However, following … Continue Reading
Last week, the House Committee on Financial Services reported out the Preserving Access to CRE Capital Act of 2016 (the “bill”) in a remarkably bipartisan sort of way (paving the way for: “Well, yes, I did vote for it, but then I voted against it.”). The bill, which was drafted and backed by CREFC, would … Continue Reading
Just in case you set your copy down during the cocktail hour at the SFIG & IMN ABS Vegas 2016 Conference, here is our latest OnPoint: RMBS Risk Retention is Here. Click here for more information about Risk Retention.… Continue Reading
