Asset Securitization Report - July/August 2018

Private student loans made before the financial crisis were once considered a toxic asset. A recent $414 million securitization by FirstKey, an affiliate of Cerberus Capital Management, shows how much things have changed.

The bank, which purchases loans from Mosaic, is contributing an unspecified amount of collateral for the $317 million deal; it's also the underwriter and risk retention holder, and appears to be behind the unusual structure.

LTC Global is one of the market leaders in a "relatively new" esoteric asset class of acquiring and financing insurance commission assets of life and healthcare insurance products, says DBRS.

Frameworks have largely improved since the financial crisis, but there remains a lack of consistency and some recurring weaknesses that are keeping some traditional U.S. RMBS investors on the sidelines.

While the result is anticlimactic, the court’s observations are more interesting; they tend to reinforce doubts about the usefulness of this alternative bankruptcy proofing mechanism.

Banks and other firms collecting defaulted debt originated by another company are not subject to the kinds of restrictions placed on third-party debt collectors, the Supreme Court ruled Monday in a unanimous decision.

CLO securities pay out interest pegged to the three-month London interbank offered rate, but loans used as collateral are increasingly switching to one-month Libor and the spread between the two benchmarks has widened significantly.

Changes that federal regulators are contemplating to the Volcker Rule could pave the way for CLOs to resume investing in high yield bonds, which they currently cannot do without putting themselves off limits to banks.

Richard Sandor has been called the father of futures trading and carbon trading. His latest passion is a fledgling reference rate that is being used by a collection of small U.S. banks to price wholesale interbank financing.

Since its inception, the qualified mortgage rule has been synonymous with loans purchased by Fannie Mae and Freddie Mac or guaranteed by government agencies. But a broader QM definition could change that by creating more competitive private-label options.