Another Fine Mezz

After teasing it for weeks, the new SRT Series of Another Fine Mezz is here. European ABS reporter, George Smith sat down with Frank Benhamou, risk transfer portfolio manager Cheyne Capital to kick the series off. Prior to Cheyne Capital, Benhamou spent over 17 years at Barclays, where he was one of the key architects of the bank's SRT platform, making him the perfect person to begin the series. In this episode, Benhamou explains why SRT is proving so popular, growing at around 20%-30% year on year for the last few years, and why it is set to only continue, particularly as US banks start building their platforms. He went on to discuss Cheyne's re-emergence in the market since he joined in April, and the challenges with building a high-quality SRT portfolio. Finally, as ever with special guests, Benhamou looked back on his career in securitization, how he came to love the industry, and why it is perfect for the "all-rounder". 

The great regulatory war over European securitization could soon be coming to an end following the European Commission's launch of its consultation last week. Naturally, the Another Fine Mezz team were very excited to summarise the reaction so far, not least for host, Tom Lemmon. European ABS reporter, George Smith was also on hand to discuss what could happen, with many market bigwigs hopeful that this could be the beginning of the end of securitization's regulatory purgatory. At first look, everything is on the table. And with 167 questions to answer, that should be ample time to discuss whatever it is respondents want to change. There are also some hints that high-quality securitizations could be treated more favourably under the liquidity coverage ratio. However, the CLO market may find itself under greater scrutiny over whether it should be treated as a private transaction. Back in the market, issuance has slowed to a steadier pace but the sterling market looks to be heating up, while there are also deals from Santander Germany and Mercedes.And finally, some trivia reveals that the Another Fine Mezz team should stop asking for whom the bell tolls. 

This week on Another Fine Mezz, host Tom Lemmon sat down with KBRA's head of European research, Gordon Kerr as part of a sponsored episode looking ahead to KBRA's structured finance symposium. Kerr spoke about the brilliant, record-breaking year for the European securitization market and the hope that this could be just the start with optimism building that transformative reforms for the sector are on the way.He also gave a sneak peak of what to expect at KBRA European Structured Finance Symposium, which takes place on October 17 in London. There's plenty to look forward to with speakers from the likes of Barclays, Bank of America, Citi, Blackstone and 400 Capital. Finally, Kerr reflected on his career that began in the late 1990's, and in particular, how he manages to look so cool even when the heat is on. 

With the summer holidays of the Another Fine Mezz team well and truly over, it was back to normal this week. Similarly, the European securitization market has eased into October with deal flow slowing to a much more manageable pace. WiZink bank completed a successful return to the market after a troubling debut in 2023 for its Portuguese credit card ABS. However, host Tom Lemmon argued that despite a much smoother ride this time around, the trade revealed familiar problems in European ABS. Despite a record year of issuance, the investor base is still far too small and doing the credit work takes far too long. Meanwhile in the UK, Tandem Bank's debut RMBS caught the attention of European ABS reporter, George Smith. It was a roaring success but the question is whether it's a further sign that UK challenger banks will start using the securitization market to help with capital management with trades not dissimilar to the large banks' significant risk transfer deals of recent years.Finally, Tom's wine-tasting trips are bearing fruit as he explained how new businesses that aim to make it easier to invest in assets like wine, art or fancy cars are looking to use securitization technology and asset-backed lending to help them scale. 

Amid the hustle and bustle of DealCatalyst’s UK Mortgage conference, GlobalCapital’s Tom Lemmon and European DataWarehouse CEO Christian Thun managed to find a quiet enough spot to sit down and record a special episode of Another Fine Mezz.A self-proclaimed “data guy”, Christian did a PhD in AI nearly 25 years before the rise of ChatGPT. He got into the securitization market while working at Moody’s, before joining European DataWarehouse in 2016.He told Tom about a recent report from his colleagues into whether better energy performance certificates on homes really means better credit quality mortgages; what needs to change in European securitization regulation; and why having the right data available is like an umbrella.Luckily the background conference noise could be expunged from the podcast with some editing wizardry. 

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.