When FGIC set up shop in the U.K., it initially got its feet wet in the CLO market as a means to generate cash flow. Three years down the line, with its current 20-member team, the company now looks to its infrastructure side as its bread and butter. Although market dynamics on the structured finance side continue to squeeze out the monoline's value, Tim Travers, CEO of FGIC London, said that there are still some opportunities in the securitization market.
The first year FGIC opened its offices in London, it completed eight CLOs. However, over the past 18 months, it has pulled back on this strategy because European deals tend to price tighter than in the U.S. for what amounts to be the same risk. Travers said that these transactions offer little in the way of arbitrage and have, subsequently, become less of a focus for FGIC's European operations. Most of the CLO business the firm does these days is seen from a global platform and generally executed via FGIC's stateside operations.