Glen Fest

Leveraged loans and collateralized loan obligations do not represent an "existential" threat to the global economy or to the U.S. banking system, as some recent highly charged reports have suggested.

As Las Vegas opens back up to tourists, MBS investors are being asked to roll the dice on the lodging industry that has been conspicuously absent from recent conduit deals amid the COVID-19 outbreak.

Westlake Automobile Receivables Trust 2020-2 pools a portfolio of loans for mostly high-mileage used-vehicles financed by the privately held Westlake through independent and franchise dealers. The deal includes a $370.9 million triple-A tranche (as preliminarily rated by S&P Global Ratings and DBRS Morningstar) that benefits from 42.75% initial credit enhancement.

The Information Management Network has announced it will proceed with its annual Fall ABS East securitization conference in Miami Beach, Fla. in December, featuring a “hybrid” in-person/virtual event format.

But deal sponsors are primarily restricting property assets to the lower risk multifamily and office buildings that lenders are more confident will weather the economic strains brought by the coronavirus pandemic.

Despite declining payment rates and increased economic pains on borrowers, prime credit-card and retail account issuers have been able to maneuver around COVID-19 stresses with little impact on servicing their accounts held in securitized portfolios.

The online small-business lender’s temporary halt to loan originations contributed to a breach of a minimum asset level for its Series 2019-1 collateral pool, according to Kroll.

The new $1.2 billion InSolve Global Credit Fund IV will pursue a subset of the alternative asset manager’s specialty in non-performing distressed loans, including those in insolvency, restructuring or liquidation, according to a company release.

Barclays Commercial Mortgage Securities Mortgage Trust 2020-C7 is backed by a pool of 49 fixed-rate loans collateralized by 153 commercial properties – of which 17 loans are tied to multifamily/manufactured housing properties representing 35.4% of the pool balance.

Potential COVID-19 stresses include a rising tide of unemployed borrowers missing payments and seeking extensions, as well as falling used-car values.

The captive-finance lender for General Motors is providing lower expectations for the vehicles' future residual values, compared to its prior lease ABS deals, in recognition of the likely severe recessionary impact of the coronavirus outbreak.

Hudson Americas is pooling its next aggregation of non-qualified, high-balance mortgages in a new securitization that is exposed to a large share of borrowers seeking or already receiving pandemic-related forbearance or deferral on payments. So far, a little over half of those granted the allowance have yet to skip any payments.

Fitch Ratings is evaluating all 59 middle-market collateralized loan obligations it rates for potential downgrades, over concerns of the ability of small-business borrowers to support loan payments under COVID-19 stresses.

Credit deterioration is slowing in broadly syndicated CLOs – but a large percentage of deals are still failing certain performance tests under the weight of underlying asset downgrades and lower payment flows from obligors.

“Since April, the decline in corporate credit has resulted in a significant number of downgrades among the assets underlying some CLOs,” a Moody’s press release stated on Wednesday.

The transaction, collateralized by 13,810 loans with a total balance of $349.5 million, is the first for Hilton since August 2019 and follows Wyndham Destinations' $325 million securitization that closed May 1.

Global Lending Services, a subprime auto lender that has ramped down its expansion plans for 2020 amid the coronavirus outbreak, is proceeding with its second auto-loan securitization of the year.

The fixed-rate loans from Earnest involve refinancings to advanced degree professionals who have greater financial means to make payments despite the economic disruption caused by the COVID-19 pandemic.

Exeter, DriveTime and CPS last week joined a small club of subprime auto lenders sponsoring ABS deals since their TALF eligibility was announced.

A new CommonBond private student-loan securitization is expected to generate slightly higher losses than the Goldman Sachs-owned lender’s previous transaction of refinanced loans of professional-degreed borrowers.