After several restructuring announcements made at the start of the year, the Societe Generale securitization team looks set to better embrace the number of opportunities available in the European market. Greg Medcraft, head of securitization at SocGen, discussed how the changes have helped integrate the bank's capabilities and have supported the growth within its European securitization group.
Medcraft said the team now has much more of an integrated capital market approach that sees assets transition from origination right through to distribution. At the beginning of the year, SocGen launched a fixed-income, currencies and commodities division, which is primarily investor focused. This new division includes an integrated financial engineering approach and a strengthened flow and structured products distribution: structuring (engineering, structured credit, securitization, and portfolio management), fixed-income and foreign exchange integrated flow business that includes Treasurys, commodities, sales and trading, as well as debt research. And within this group, SocGen incorporated its new global syndicate function. The European syndicate function is to be built on three key platforms: the existing securities syndicate, a new leveraged capital markets syndicate function and the nonleveraged finance syndicate.
Ian Fisher was named the head of global syndication and is supported by deputy head Alvaro Huete. Terence Shanahan heads the securities syndicate, with global product responsibility, which will provide clients with insight and distribution for the issuance of unsecured bonds across all client segments, in addition to covered bonds, ABS, CDOs, MTNs and project finance bonds. Marie-Ange Carrere will be his deputy. Stephen Swift heads the loan syndicate, with Damien Lamoril as his deputy. Lamoril heads the nonleveraged activity, handling issuance of structured finance, emerging markets and future flow transactions. Swift also has joint responsibility alongside Shanahan for the newly created leveraged capital markets syndicate, headed by Tanneguy de Carne. This new unit delivers structuring and distribution capabilities for leveraged loans, second liens, mezzanine, PIK instruments and high yield bonds.
According to Medcraft, the realignment of these teams should further support the growth with its European securitization focus. "The principle finance business has grown dramatically over the last five years, and we expect that it will continue to grow, but on the agency side we will probably see a decline," he said. "In terms of exit strategies, the team is looking aggressively at CRE CDOs. In commercial real estate the team expects to see at least a few deals emerge from its continental platform over the coming year."
Outside of the U.S. and Europe, Medcraft said that the team is looking to expand its Asian and Eastern European focus, particularly on the CMBS side of the business. "CMBS is an area of growth across the business and bringing together the asset financing group with the commercial mortgage groups ultimately bodes well for the bank because we are able to look at our own assets for securitizing," he said. "We are hopeful that we will see more from our originating units."
The concept of originating, warehousing and recycling the bank's assets is best outlined by SocGen's Working Operating Capital (WOC) unit, Medcraft said, adding that the group saw lots of potential within the real estate corporate financing side of the business, as well as infrastructure securitizations. On the asset financing side, the group was also looking at big- ticket leasing deals.
Medcraft has seen the evolution of SocGen's securitization team from its inception - with 20 years seniority, he was one of the names that started the business for the bank. He said that the recent realignments keep the team well in line with where the European securitization market is headed. "Now that this technology has been commoditized, the issue is what can you plug in to make it work better - securitization is where the big opportunities lie really, anywhere in the world."
He offers France as an example, where the established mortgage market doesn't offer a nonconforming business model, but by plugging in securitization technology, Medcraft said, SocGen has been able to make strides in creating a new segment within this existing mortgage market.
"It's not just guys organizing deals - we are starting from origination right through," Medcraft said. "I think the team is in line with where the market is going - we are much more in control of our destiny."
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