Canopy Financial Technology Partners’ Post

While securitizations offer numerous benefits, there are a number of important points for originators to consider to facilitate entering into a securitization transaction and to avoid prolonged legal work further down the line. In this article, we briefly discuss essential points that originators should be aware of and discuss with prospective lenders or arrangers prior to structuring a securitization. #Securitization

From the partial refinancings that Dealscribe has seen in 2024 around 40% include additional changes to the docs unrelated to the refinancing itself. The number and scope of these amendments varies considerably. One of the most extensive recent examples is a partial refinancing analysed by our team in April 2024. The transaction updated the WAL test threshold, concentration limits, defaulted swap baskets, restricted trading period requirements, post-reinvestment requirements, treatment of long-dated assets in the OC numerator, the Moody’s WARF test and maturity amendment language. However, the notes rated below double A remain outstanding and there is no change to the length of the reinvestment period, which had already ended in October 2023. Dealscribe’s weekly #Pitchfork email lists recently executed partial refinancings and includes a summary of the changes they introduce. Reach out to contact@dealscribe.com to be able to see these updates and more #partial #refinancing #document #deal #changes #collateralizedloanobligation #realintelligence #thedevilisinthedetail

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What do we expect to change in UK securitization regulation in the next 12 months? How is the return of high-street banks affecting the market? These and other topics will be discussed at our upcoming GC Live private briefing for issuers and investors on UK Securitization, taking place in London on March 13 - in partnership with KBRA and Latham & Watkins. This is your opportunity to listen, learn, discuss, and debate the most pressing issues and latest developments in the UK securitization market with your peers. Don’t miss out and secure your spot by emailing us at gclive@globalcapital.com or visit https://lnkd.in/eRM34BYV to apply for your place. #GCLive #securitization #capitalmarkets

Save the date for our upcoming GC Live briefing on UK Securitization on March 13 in London in partnership with KBRA and Latham & Watkins. Don't miss out on this opportunity to stay ahead of industry-defining moments. The discussion will explore UK securitization regulation, how the return of high-street banks affects the UK securitization market, and non-prime RMBS in a higher for longer economic environment. To attend, email us at gclive@globalcapital.com or visit https://lnkd.in/eRM34BYV to apply for your place. #GCLive #securitization #capitalmarkets

In a syndication deal, cash distributions flow during operation, following agreed-upon percentages. The lion's share comes at the end, during refinancing or property sale. Dive into the world of syndication success! #RealEstateWealth #SyndicationProfits #BackstageGuide

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Following Chairman Powell’s remarks in Jackson Hole, all eyes are focused on potential rate cuts in a few weeks time. UBS’ MD and Head of Structured Credit recently joined Reorg Radio to touch on the future outlook of structured credit, including that of collateralized loan obligations. Here are a few of my takeaways from this listen: Fundamentals of CLOs Recent Timeline Around CLOs Demand and Liquidity around Structured Credit A Short post 1> Fundamentals of CLOs Collateralized Loan Obligations are a collection of business loans that are pooled together, securitized, and then passed on to different owners in separate tranches of debt. These tranches are graded on a variety of factors centering around the risk profile of these securities. During macro environments like the current state, fundamentals of these CLOs remain strong, especially for the higher grade tranches. However, high rates are weighing down on the lower tranches which include low investment grade companies that hold large amounts of leverage on their balance sheets. 2> Recent Timeline Around CLOs Market selloff started in August with poor labor reports and was exaggerated following the yen carry trade unwind amongst other forex events. CLO face values went from being in the 99 range to mid to high 98s. Higher quality was less impacted and this was much more to do with the technical change in this environment. While volatility likely is here to stay with the upcoming slew of political events and data reports, there remains opportunity in structured credit. Even though this volatility disallows some resets and refinancings to take place, it allows for the equity investor to create a new CLO to ramp their own loan portfolio below par and accelerate the overall state of issuances as such. 3> Demand and Liquidity around Structured Credit Given the rates forecast and potential volatility on the horizon, there has been a lot of outflows with given volatility and the market continues to have some concern about a continued drawdown. There is also a lot of speculation around ETFs within the space and the ability for lower rated ETFs to withstand such pressures. This is because a lot of the lower-rate bonds and loans have caused a drawdown in subsequent ETFs causing many to trade well below historical averages. CLO call volume has been elevated as per previous years to contrast activity in ‘22 and ‘23 where loan prices were much more depressed. As long as the market remind strong, Verdi believes that there will be a continuance of buying opportunities and investor confidence. Old deals will also have the ability to get called, reset/refi and have investment periods pushed back. // PS, if you like this, you’ll love my newsletter - Pari Passu - that will teach you an advanced investing concept / story every week. Link in bio Pari Passu Newsletter

What is a Repeat Offering Securitization Entity (ROSE)? A Repeat Offering Securitization Entity (ROSE) is a special purpose financial structure designed to conduct multiple securitization transactions. It functions like a shelf company, allowing issuers to efficiently issue tranches of asset-backed securities (ABS) on an ongoing basis. Here are some of the key benefits of using a ROSE: Increased Efficiency: Reduces the administrative burden and costs associated with setting up a new legal entity for each securitization transaction. Standardization: Streamlines the process by creating a standardized structure for issuing ABS. Investor Familiarity: Investors become familiar with the ROSE structure, potentially leading to faster deal execution and potentially lower issuance costs. Let me know in the comments if you have any questions about ROSE or securitization in general. #securitization #structuredfinance #ROSE #capitalmarkets

The Larger They Are, The _______ Larger LBO transactions - two key considerations, 1) deal flow has slowed materially, 2) BSL is fighting back as banks arrange financing terms that are highly competitive for syndication which then has the knock-on effect for private credit to compete in Upper Middle Markets and large deals to provide tighter spreads, looser documents, and cov-lite loans. However, the Middle Markets and Lower Middle Markets still carry wider spreads, tight documentation, and strong covenant protection. Bottom line for investors: Money-center banks are punching back at large Private Credit lenders, and spreads have gapped in for larger loan deals as terms converge with BSL. Moral of this story is to maintain investment discipline and stick with Middle Market Lending -> better returns, more consistent credit outcomes. Marathon Asset Management sees this with our own deal flow stemming from our robust origination platform. The chart below shows the dominant share of Middle Market M&A and thus the opportunity for Middle Market Direct Lending whereby non-bank lenders (private credit funds and BDCs) provide financing for sponsor and non-sponsor backed transactions.