Another Fine Mezz

On this week's episode of Another Fine Mezz the podcasting duo of host, Tom Lemmon and European ABS reporter, George Smith barely had time to come up for air thanks to the wealth of supply in the market and the publication of Mario Draghi's report on European competitiveness. Starting with Draghi's report, the former president of the ECB published his report for the European Commission and set out in rather more detail than before, how European securitization should be revitalised. One market participant said to GlobalCapital, it was no longer a "pious hope" of reform, but actionable changes that were now on the horizon. There are some concerns over whether the liquidity coverage ratio will be included in the bits of the EU Securitization Regulation that are up for reform, which one investor likened to making cars with only three wheels allowed. But overall, it is a further sign that the market could be freed from its regulatory chains sooner rather than later. Back in the real world, issuance for the year is set to be a post-global financial crisis record. And in large part, that is down to the amount of bank supply. George explained the two key reasons why it is happening this year and reflected on the frantic demand for Southern European mezzanine notes in the last couple of weeks too.

“What's in a name? That which we call a rose by any other name would smell just as sweet," wrote William Shakespeare in his play, Romeo and Juliet. In this week's episode of Another Fine Mezz, it seems that the answer is quite a lot actually, Bill. European securitization issuers are known for their creative labelling of SPVs, but it has always seemed somewhat silly and meaningless. But following the success of specialist UK mortgage lender Paratus' new mixed pool RMBS shelf, the £564m Braccan 2024-1, the value of keeping everything neat and tidy is clear. As European ABS reporter, George Smith said himself it was simply too hectic this week to mention every single deal that hit the screens this week. By our count, there were 10 deals that priced and the pipeline continues to grow. Alongside the manic market, roughly 400 securitization specialists took time out to attend S&P's European Structured Finance Conference in London, where there was a perfect storm of positivity. In part, it's driven by the active and stable market they have in front of them, but it's coupled with a tantalising hope that meaningful regulatory reform is on the way. And finally, while George wrote an ungodly amount trying to cover all of this off, host Tom Lemmon was busy gallivanting around London talking about his golfing success of the weekend and visiting Coterie Holdings, owners of wine-backed lender Jera and part owners of wine investing platform, WineFi. Thankfully, his 10 minute dissection of the wines he tried did not make the final cut.

This week on Another Fine Mezz, the carnage well and truly began in European ABS with 11 deals in the market. European ABS reporter George Smith and host Tom Lemmon barely came up for air last week. Issuer tactics will be interesting to observe from the sidelines, with many thinking that there's no reason to wait with demand so strong. However, George reckons that the US election won't create half as much panic as some syndicate desks assume. Finally, the podcasting quartet was in mourning for it was the last episode with CLO reporter (and co-founder of the podcast) Victoria Thiele. Although Victoria is definitely taking a six-week break, she may return in some capacity as a part-timer in October, so it's not all doom and gloom. If it is to be her last, there was fittingly humungous CLO news to make up for the occasion as European CLO manager Fair Oaks became the first to successfully launch a CLO ETF in Europe. However, to Victoria's dismay, its more aimed at institutional investors and high net-worth individuals than millenials with a trading app.

In this week's episode of Another Fine Mezz, host Tom Lemmon was standing in once again for the travelling George Smith, and while he expected a quiet mid-August week, the European ABS market had other ideas. The expectation was that the market would begin to stir following the UK bank holiday on August 26, but a number of auto ABS issuers began marketing deals early to ensure investors get a good look. It seems the expectation that September would be busy has been changed to September will be extremely busy. It could end up looking like a battle royale in no time at all. Looking further ahead, the question is how long it can last. Meanwhile in CLOs, the market looks to be having something of a volatility hangover with deals taking a bit longer to complete and landing a bit wider. That gave CLO reporter Austin Barnes his first opportunity to delve into the niche world of deal documentation, focusing specifically on overcollateralization (OC) tests. OC tests are used throughout a CLO to ensure that each tranche is protected, but further down the stack on the single-B's they become a useful guide for which investors hold the balance of power. Managers, desperate to get 3rd party equity involved, are trying to loosen the terms and get rid of OC tests on the single-B tranches but mezz investors are holding firm, for now.

This week on Another Fine Mezz was dominated by host Tom Lemmon's love of talking about a regulatory revolution in European securitization. The European ABS market was quiet once again, but that gave time to dissect a research paper by Risk Control and authored by a who's who of securitization's regulatory big beasts. There are number of transformative proposals put forward, but perhaps the most crucial is the way it seeks to reframe the debate towards how securitization can help the EU economy grow. Meanwhile in CLOs, CLO reporter Austin Barnes might just have had his first scoop with Acer Tree set to return to euro CLOs soon after an unlucky start a few years back. Finally, CLO reporter Victoria Thiele thinks she's found some more evidence to show that a first European CLO ETF is edging closer.

After a manic Monday on which some ABS bankers wondered whether we would even have a market by the end of the week, the Another Fine Mezz team is happy to report that we do. Yet again, ABS reporter George Smith appears to have deserted his post just when all hands are needed. He spent the week driving through the Scottish Highlands blissfully unaware of volatility indices, while host Tom Lemmon and the CLO duo of Victoria Thiele and Austin Barnes held the fort. Despite fears of a new global meltdown, Santander managed to add yet another prime RMBS from its Holmes Master Issuer shelf. It was only a day later than expected, and looked rather elementary by the end. Meanwhile in European CLOs, a market perhaps more directly affected by the meltdown that wasn't, the impact on sentiment really depended on who you asked. Nevertheless, by the end of the week a cautious optimism had taken hold — as Sona, Polus and Palmer Square all priced deals. As for the US CLO market, spirits rebounded remarkably quickly despite one banker's Armageddon forecast on Monday. By the end of the week, it was back to the usual rhythm.

On this week's episode of Another Fine Mezz, it was something akin to podcasting musical chairs with CLO reporter, Victoria Thiele, taking over from usual host Tom Lemmon, alongside the return of new CLO reporter Austin Barnes while George Smith stayed firmly put as ABS reporter. With August now upon us, it was perhaps no surprise that there were no publicly placed deals in European ABS this week. However, George did manage to find time to rage at the low-quality opinions circulating LinkedIn on significant risk transfer (SRT) deals. Meanwhile, in CLOs the resets keep on coming. The triple-As may be wider but with such dramatic tightening on the mezz this year, the overall costs keep the arbitrage working and managers printing. However, looking further ahead, loan shortages might soon start to scupper the euro CLO market. And finally, last week, Austin left listeners hanging over where his weird accent comes from and this week he reveals all... did you guess right?

This week on Another Fine Mezz, the usual suspects of host, Tom Lemmon and CLO reporter, Victoria Thiele were a man down owing to European ABS reporter, George Smith losing his voice - of all things. However, GlobalCapital now has a securitization podcasting production line not dissimilar to Australian cricket's fast bowling ranks, which meant it was time for a debut (more on the Australian cricket references later). George's absence paved the way to welcome the newest CLO reporter, Austin Barnes to the show. In European securitization, just one deal was priced, Bletchley Park Funding 2024-1, by specialist buy-to-let lender Quantum Mortgages. And with so little activity in Europe, an Australian reverse mortgage RMBS took the limelight. The deal, by Household Capital, was the biggest Australian reverse mortgage RMBS in a decade at A$263m ($172m), but the Aussie securitization market as a whole appears capable of teaching the European market a thing or two. Meanwhile in CLOs, resets and refinancings were the dominant force in the US, particularly as triple-A spreads are stuck in the 135bp over Sonia range. It's better news for Euro managers though, as third party equity appears to be back for good in Europe, at least for the tier one managers.

On this week's Another Fine Mezz, usual host Tom Lemmon was taking a well-earned break to play golf, but it seems his enthusiasm for the sport has spread to European ABS reporter, George Smith. Perhaps he was also inspired by the professionals in Troon this weekend. Away from golf, it seems European CLO equity may be getting easier to sell too. It's not quite "gimme" distance but for the biggest players, it is starting to feature in conversations more, CLO reporter, Victoria Thiele said. In European ABS, it was a delightful week for debut issuers with three out in the market for the first time. In 2024, there has been a notable increase in debut deals, in part because the market has been so treacherous in recent years. But it could also be a further sign that securitization is becoming a viable funding option once again.

GlobalCapital's CLO reporter, Victoria Thiele, returned to her desk just in time from her trip to Germany this week, in what was a collection of the weary thanks to international football and growing babies. With a less hectic week in the primary ABS market, securitization editor, Tom Lemmon, and European ABS reporter, George Smith discussed whether fine wine ABS might soon be a thing after an interview with a wine-backed lending platform. With the dust just about settling following the EU election, UK election and French parliamentary election, the big story of the week looked at how the momentum for regulatory reform in securitization would change in this new political dynamic. French president Emmanuel Macron may be weakened, but all is not lost, according to some market participants. On CLOs this week, managers glided inside 130bp over three month Euribor with deals from CVC Partners and Spire the first to get below the barrier. In addition, Victoria also explained how the economics of resets can still work even if its not a direct tightening on the triple-A notes. Finally, the Another Fine Mezz team had its fourth member play them out on the tambourine.

At last, the Another Fine Mezz team's CLO Series is back with a bang after to chatting to potentially the hottest property in CLOs. That is John Kerschner, head of US securitized products and portfolio manager at Janus Henderson. Also known as the man behind the mammoth CLO ETFs, JAAA and JBBB. Together, the two CLO ETFs have just under $12bn in assets under management, roughly doubling in size since the start of 2024. On the episode, Kerschner explained how ETFs work in a CLO context and the challenges they will still face. One of the biggest challenges is educating investors, whether they be new to CLOs or new to ETFs. And he also touched on Janus Henderson's plans for a European CLO ETF. As ever in the CLO Series, Kerschner spoke about how he went from an ecology graduate to a securitization investor, the keys to being a good investor, and how to stay as calm when things get hairy.

Holiday season is in full flow it seems for the Another Fine Mezz team. Last week, usual host, Tom Lemmon, was enjoying an early Summer break, and so this week he stepped into cover for European ABS reporter, George Smith. This was a week characterised by election excitement, with every issuer still in the market looking to be done sooner rather than later. Deals from Cerberus and Ford's German branch followed with no hiccups but the visible pipeline is now quiet. In the meantime, building from Bank of America Research's report on insurance companies using European securitization, which showed it to be pitifully low, there were signs in the UK that insurers are starting to take a closer look once more. It's a small change, but it is yet another morsel of evidence that suggests the resistance to European securitization is thawing, albeit slowly. In CLOs, Arini priced yet another successful Euro CLO to go along with its growing reputation despite its infancy, while a number of resets and refinancings got away well too. CLO reporter, Victoria Thiele also released a first half of the year league table for both the US and Europe. Both markets experienced a better than expected year with tightening and lots of issuance, the only question is how much more will come in the second half of the year.

The weird and wonderful world of European securitization was in full view last week with a number of issuers showing off their creative sides through their penchants for animal-themed shelfs. Hyundai had an Auto ABS named Pony, while ING came out with yet another Green Lion, but most interesting of all in the animal ABS kingdom was from Cerberus' buy-to-let RMBS, Edenbrook Mortgage Funding. It's a one-off deal from a portfolio of loans that was not included in Cerberus' sale of CHL Mortgages to Chetwood Financial, and is expected to price on Wednesday. The €1bn Green Lion 2024-1 is the second edition of ING's rare Dutch prime RMBS that is, as the name suggests, aligned with the Icma Green Bond Principles for Green Use of Proceeds and Green Collateral. This time around, it's also aligned with the EU taxonomy on energy performance and climate risk. Meanwhile in CLOs, the market continues to trend tighter after Fidelity's 131bp over three month Euribor print on Thursday. And issuance could pick up soon with a wave of repricings in the loan market accompanied by new money loans as well. Both markets are keeping an eye on the elections in both the UK and France, with little new supply expected this week. However, with barely any predictions for anything other than a Labour victory in the UK, sterling issuance should pick up by July 8. The rise of Marie Le Pen in France is somewhat more difficult to grasp, as CLO reporter Victoria Thiele is at pains to point out.

What a week it was for European securitization, filled with both encouraging and worrying events for the Another Fine Mezz team to get stuck into. Firstly, host Tom Lemmon stepped into his old European ABS shoes to cover the exciting news that some form of public renewable energy ABS might soon be a reality in Europe. On June 14, Hometree, a UK-based residential renewable energy provider completed the first ever renewable securitization warehouse in the UK, in a £250m deal with Barclays. That means the UK is now in a three-way race to be the first to issue in the public market with Germany and Spain. But a bit like the football, the Germans look favourite to cross the line first. Meanwhile, all is not well in European CMBS. Senior noteholders in a European CMBS stand to lose principal for the first time since the global financial crisis of 2008 on UK retail deal Elizabeth Finance 2018. "It's a bit of a shock," said one source close to the deal. Finally, in an otherwise quiet week for European CLOs, Palmer Square managed to drag investors to the tightest print of the year. However, despite all the tightening, long-term hurdles remain in the market.

Stellantis grabbed the attention of the Another Fine Mezz team this week after pricing a huge €1.2bn Italian auto ABS with investors desperate to get their hands on it. The buzz from Barcelona is still continuing it seems with strong demand for a range of ABS paper, including Nationwide's second 'stock and drop' deal and yet more Italian paper, in the form of consumer ABS. Meanwhile in CLOs, the market is reopening at a slightly more leisurely pace. But Bain's decision to get out early has paid off, pricing at 141bp over three-month Euribor on Thursday. Finally, the team basked in the glory of finally acquiring a professional production editor.

A jam-packed episode of Another Fine Mezz this week meant a full line-up of podcasters was needed, and they duly delivered. With European securitization reporter, George Smith, away for the last couple of weeks, he was forced to pick his favourite. As ever on the podcast, creativity in the market is rewarded and so it was perhaps unsurprising that the auxmoney-owned Lender & Spender deal named after a dog won out. CLO reporter, Victoria Thiele had been away for most of the week, leaving host Tom Lemmon to straddle both US and European CLO horses. The US market, led by AGL Credit's 140bp over Sofr print, is flying. At the time of recording Euro CLOs was winding down, but a late Friday rush was expected and five managers got a variety of transactions done before the Global ABS conference. In addition, for the second half of the podcast George spoke to Mirco Iacobucci, senior vice president and sector lead of European real estate ratings at Morningstar DBRS for a sponsored interview on CMBS. With CMBS having a mini-revival this year, the pair discussed the birth of data centre CMBS in Europe, performance issues in the sector and the outlook for the rest of the year.

This week's episode of Another Fine Mezz had a distinctly American flavour to it, owing to CLO reporter, Victoria Thiele's trip to New York and the rapid tightening in the US CLO market. In addition, European securitization reporter, George Smith, was away taking a well-earned rest after his gigantic contribution for GlobalCapital's Global ABS special report (which delegates can get their hands on from June 4). The US CLO market has tightened dramatically in the last couple of weeks. Where once 150bp over Sofr on the triple-As was considered a hard line in the sand for investors, some managers are close to printing at 140bp and many expect it to continue down towards 135bp. Meanwhile, the squeeze on spreads has eroded the tiering premium to all but a couple of basis points for the tier two and three managers, such is the demand for CLO paper. Finally, the Another Fine Mezz team is delighted to announce that they have twisted the arm of Invisso just enough to get the chance to record the podcast live from Global ABS in Barcelona. The podcast is scheduled to go live at 2.10pm CET in the exhibit hall, where all are welcome to enjoy the usual ramblings over lunch.

This week on Another Fine Mezz, securitization editor Tom Lemmon gave usual podcasters George Smith and Victoria Thiele a well-earned rest. That was to make way for Michael Herzig, senior managing director and head of business development at First Eagle Alternative Credit in the first episode of GlobalCapital's CLO series. The US CLO market is back firing again with some now even contemplating whether 2024 will exceed the banner year of 2021. Herzig discussed how he thinks the rest of the year will play out, how middle-market CLOs will grow in importance, and how the market has helped reinvent itself in the years since the global financial crisis. The second half of the episode discussed Herzig's over 30 years in the industry, including sitting just four desks away from Greg Lippman of Big Short fame as the first rumbles of a looming crisis arrived. Finally, Herzig shares the keys to success in the world of CLOs, perhaps best summarised as "don't be a jerk".

This week on Another Fine Mezz, the spectre of challenging diaries due to time difference meant usual host and securitization editor Tom Lemmon had to miss out. However, European reporters George Smith and Victoria Thiele went on a whirlwind tour of securitization in super quick time. Although it seems some in the market may need to go back to school because there's a CMBS comprised solely of data centres, rather than the usual commercial real-estate mortgages. But as George said, the 'M' stands for data centre. There's also an update on the booming significant risk transfer market, with issuers beginning to prefer cash deals. Meanwhile in CLOs, Brigade made a roaring return to the market after three years away (who can blame them?). With arbitrage the best it's been in a while, they've even secured third-party equity.

The UK had a lot going on politically with its local and mayoral elections last week, which perhaps explains why the future of UK securitization regulation wasn't on the front page of the nationals. However, for GlobalCapital's team of securitization podcasting hacks on Another Fine Mezz, it certainly was. European securitization reporter, George Smith discussed what changes have been finalised in the new UK regulations which will come into force on November 1. There is also hope that it will lay the groundwork for more radical reforms in the future. Surely, things can only get better. There is also an unusual pipeline developing in European ABS, with two CMBS transactions in the works alongside a huge Italian RMBS. Finally, CLO reporter, Victoria Thiele has less deal activity to report on but managers are still grinding away to tighten the market. Palmer Square has led the way, dragging the market to pre-Ukraine war levels.