Recently, Dechert Partner Sarah Milam partook in an auto ABS panel discussion at ABS East in Miami, Florida.  Sarah and four distinguished panelists discussed the state of the ABS auto loan market, issuance, yields, collateral performance, ESG trends, and deal structures.  Sarah sat down with Associate Griffin Hamilton to recap the conference.
Continue Reading Auto ABS: Uncertainty and Excitement Ahead

It’s coming up on awards season.  The Emmys were last week and weirdly, I got a thought bubble about nominees in the Black Swan category, walking the red carpet looking for attention!  Think the Masquerade scene from Phantom of the Opera when the Phantom comes prancing down the stairs to harsh the festivities (at least he sang well).  

We have some obvious nominees today.  But are they the real thing?  Will they move markets?  We have, with some reason, become inured to the disruptive headlines howling about threats to our way of life.  Is there simply too much chaos out there to pick out the things which are really relevant from the noise?  Our 24-hour news cycle is hardly helpful, is it?  The talking heads, with practiced expressions of concern, seriousness of purpose and faux competence, serve up our daily quantum of fear and distress (Film at 11!).  Don’t they seem almost gleeful to report yet another potential disaster?  With breathy anxiety, designed to tug at our atavistic fight or flight instincts, they repurpose as news exaggeration, hyperbole, vague allegations, unconfirmed reports and sheer speculation.

The scary part is, of course, that buried and obscured in all that noise might be real news, things that investors and market participants really ought to be paying attention to because they will matter.  The trick is sussing out the stuff that matters from the stuff that doesn’t.

So, we really do need to take into account these aspirational swans.  One of them could be that figurative dead archduke.

Let’s take a stroll along the red carpet and chat up some of these swans.Continue Reading Does A Red Carpet Full Of Black Swans Matter?

Here at Dechert, we have market-leading practices in CRE CLO as well as corporate CLOs, including broadly syndicated and middle market structures.  So, every day that I peer into these two alternate universes, I’m astonished at how different these two fundamentally similar leverage technologies really are.  Certainly, even at a modest remove, they look pretty much the same.  A sponsor is looking for match term leverage and has developed a healthy disquietude about the mark to marketness of the repo market and has read CrunchedCredit assiduously and understands that portfolio lenders need multiple modalities of leverage.  Said well-educated sponsor conveys financial assets into a securitization vehicle which issues time and ratings tranched debt to a wide range of investors seeking exposure to the space in a more liquid and more focused risk/yield return way.  Tada!
Continue Reading A Modest Proposal: Why Can’t CRE CLOs Be More Like Corporate CLOs?

I am trying to figure out how much I care, as a businessman (as opposed to an actual living, breathing human being), about the chaos swirling around us.  Every day’s news seems more the stuff of a dramatic conceit of someone’s next thriller than reality.  Throw in a car chase and some sex, and we’ve got a movie.  (The North Carolina sexting scandal doesn’t really get us there for this purpose.)
Continue Reading Inflection Point? How Much Change Are We Really Facing?

While it seems like the COVID pandemic has taken over every waking moment of our lives, the impending end of LIBOR marches ever onward.  All signs point to a termination date for the troubled benchmarks at the end of 2021, pandemic be damned.

The purpose of this post is not to discuss the road to transition so far, though if you’d like to take a trip down memory lane, here is what we have seen. Instead, we wanted to bring your attention to the fact that, whilst the UK Financial Conduct Authority’s (FCA) momentum continues, COVID has created some bumps in the road, even on the journey to the end of LIBOR.Continue Reading LIBOR – The UK Beat Goes On

COVID-19 has driven anxiety over the LIBOR transition right off almost everyone’s top-of-mind list and yet the crisis is taking no notice of that lack of regard and soldiering on.  The ARRC continues to beaver away, generating guidance and advice and otherwise proselytizing the need to get on with it and be ready for transition on January 1, 2022.

But are the markets listening?  Look at our ardor!  Except for special situations, the use of SOFR, to date, has been a political and not an economic decision for those who have elected to use it.  There is little take-up in the real world and little enthusiasm for doing so.  And what’s with the huge whoops a few weeks ago when SOFR’s March to the Sea was interrupted when the Fed backed off using SOFR in the Fed’s new $6 billion aid program for small and mid-size businesses?  Run away! Run away!  Back to LIBOR!Continue Reading LIBOR: The Monty Python Parrot of Finance