Stacking up
In a year when regulatory uncertainty and Brexit deadlines sometimes left EMEA securitisation in limbo, one bank refused to stand still. For all-round ability, for leading the full-stack charge and for deploying hefty balance sheet, BNP Paribas is IFR’s EMEA Structured Finance House of the Year.
BNP Paribas’ securitisation business has surged in recent years, from nine deals through the whole of 2015 to 30 placed deals over the past 12 months.
"Each year we're getting bigger and doing more," said Simon Jones, co-head of BNP Paribas' securitised products group. "It's not just the number of deals but the amount of balance sheet we're putting into the market.
And after adding a commercial real estate string to its bow in 2019, BNP Paribas can match its US peers in boasting a full presence across ABS, MBS and CLOs.
But as a European bank close to the regulators and with plenty of its own consumer assets to securitise, it was in full-stack eurozone consumer ABS, designed to generate capital through significant risk transfer, that BNP Paribas provided clearest leadership in 2019.
"We wanted to take cash SRT mainstream because we don't think it needs to be a bilateral private placement product. It needs to be a normal traded product like everything else," said Bilal Husain, head of EMEA asset finance and securitisation.
The ECB had stopped approving established cash SRT structures in 2018 because of concerns about excess spread transfer. BNP Paribas paused its SRT plans and worked behind the scenes to convince the regulator to buy into a redeveloped structure, which was unveiled to the market in July with Italian auto ABS AutoFlorence 1.
AutoFlorence, from BNP Paribas Personal Finance subsidiary Findomestic, sold the whole capital structure after an upsize to €950m. More full-stack deals followed from the group's French and German subsidiaries.
Boudewijn Dierick, head of ABS markets, said the deal only came after very long discussions with the regulator. "We were convinced that our structure worked," he said.
And once the ABS was out BNP Paribas took calls from competitors asking how the structure had received approval, and how it had managed to place the large amount of mezzanine and junior bonds.
All this came after uncertainty about the simple, transparent and standardised regulations meant a slow start to 2019 but BNP Paribas was in among the early STS activity, as co-arranger for the first registered STS trade – a private RMBS for Credit Immobilier de France. And the bank was joint lead for Nationwide's Silverstone RMBS, a first for the UK market in terms of being an STS deal and referenced to the Sonia risk-free rate.
Other stand-out securitisations in 2019 included a debut UK buy-to-let RMBS from fintech firm LendInvest, CIF's first public RMBS and BNP Paribas' first Irish RMBS mandate, for Finance Ireland.
Deals through 2019 came from the UK, France, the Netherlands, Italy, Germany and Ireland. US dollar placement included Yorkshire Building Society's first ever US dollar issuance from its Brass RMBS programme.
On the CLO side the bank brought the first trade from Apollo's Redding Ridge, and won first-time mandates from The Carlyle Group and Oaktree Capital Management.
That activity has put BNP Paribas third in European league tables, with an 8.1% market share.
Primary presence benefits from the bank's secondary trading desk, which can deploy up to €850m of balance sheet. It has traded more than €6.9bn of market-value risk year to date and increased its secondary CLO volumes by 41%.
"Our main focus has been on velocity and turning positions – and that has given us even more visibility on where to place primary," said Mehdi Kashani, head of ABS and CLO trading.
BNP Paribas does not have the CMBS platforms of some of its peers, but in 2019 it helped Unibail-Rodamco-Westfield and Logicor use secured bonds with a CMBS twist to sell trades that at £750m and £900m, respectively, would have been too big for pure CMBS buyers to absorb.
BNP Paribas has also deployed serious balance sheet to lend into the private markets, with more than €4.5bn-equivalent on ABS, RMBS and trade receivables over the past 12 months. This year it increased the capacity of its ABCP conduit Matchpoint to €20bn from €12bn.
And it was co-arranger on a US$3bn private receivables deal for a global IT manufacturer that distributed a full capital structure – part of a growing trend of matching corporate clients, previously reliant on bilateral bank lending, to private equity and hedge fund clients with appetites for different parts of the capital structure.
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