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.