Securitization

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.

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.

Mortgage rates increased slightly for the second consecutive week, buoyed early on by positive economic news such as the jobs report that came out last Friday, according to Freddie Mac.

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.

The FHFA looks to shed light on the amount of funds Fannie and Freddie will need to hold for their risk-sharing deals.

The firm also predicts that the coronavirus pandemic will delay the GSEs' release from government control.

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.

Fannie Mae and Freddie Mac have different timelines for the switch.

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.

The best outcome for creditors and ABS noteholders with approximately $6 billion in outstanding bonds is likely to be through a renewal of Hertz’s operations, rather than liquidation, according to analysis from the ratings agency.

The coronavirus made it particularly tough for independent contractors and independent business owners to get home mortgages, but there are some signs that market may recover soon.

The bonds will finance the purchase of GSE-eligible loans for the revolving warehouse facility.

Starwood Capital Group is adapting its RMBS strategy for COVID-19, most notably through additional protections for senior noteholders to mitigate the substantial number of deferred mortgage accounts included in its newly sponsored deal.

The private equity firm's REIT arm is seeking to price a second CRE loan portfolio for May, this time led by an industrial portfolio of warehouses and logistics centers. No hotel or shopping mall loans are included.