John Hintze

Morgan Stanley is starting afresh, with a $765.3 million CMBS deal issued through its MSC 2021 trust that comprises 43 loans secured by 60 properties and originated in April 2021 or later, as the vaccination rate gained momentum and Covid infection rate declined.

Approaching the market with its third and largest deal this year, non-QM originator and issuer Angel Oak Home Loans LLC (AOHL) plans to issue $303 million in asset-backed securities following the recent completion of its initial public offering.

Managers expect to be holding portfolios of loans priced to potentially different benchmarks, which could present a major challenge in trading assets and re-calculating note coupons currently tied to the outgoing reference rate.

Worried initially that marketplace lenders might falter at the first stage of a crisis, the sector has weathered the COVID-19 storm and now projects to match 2019's record securitization deal volume.

Last month, prominent investor Steve Eisman pegged Credit Acceptance Corp. as his new big short, based on a belief the subprime auto lender and its industry may come under closer CFPB scrutiny under the new administration. Analysts are taking note, as well.

Although returns may be lower than in recent years, CLO securities (particularly the senior-rated tranches) remain very attractive compared to alternative investments.

The likely extension of support of Libor until June 30, 2023 is a major plus for the securitization market, fending off potential market disruption the buying and trading of $1.8 trillion in outstanding asset-backed securities because of the planned cessation of the benchmark rate by the end of 2021.

CLO manager Brigade Capital Management has refinanced several tranches of notes to improve the spreads and boost the tranches' ratings.

Coronavirus-related disruptions at retail and hotel properties are fueling a surge in conduit CMBS delinquencies, according to Moody's Investors Service.

Owl Rock Technology Advisors, the same team supporting other Owl Rock CLOs, has launched an inaugural middle market CLO that is continuing the CLO manager's tradition of spreading underwriting responsibilities among a variety of banks.