SFIG Announces New Board of Directors

The fledgling US securitization industry group known as the Structure Finance Industry Group, Inc. or “SFIG” announced the results of its recent board elections earlier this week.

Formed earlier this year, SFIG is attempting to right many of the mistakes that many in the industry feel the American Securitization Forum or “ASF” has made over the years.  Importantly, it seems fairly clear that the chief executive of SFIG, Richard Johns, will be fully accountable to the new Board of Directors and therefore by extension, to the membership of the SFIG.  Apparently, this wasn’t always as clear at the ASF.  Officers of the new Board include some well-known industry veterans, Reggie Imamura of PNC Financial Services Group, Christopher Haas of Bank of America Merrill Lynch,  Jordan Schwartz of Cadwalader, Wickersham & Taft LLP and Gregg Silver of 1st Financial Bank USA.

SFIG has gotten off to a fast start with a competing industry conference planned for early next year in Las Vegas and they been active in several regulatory and legislative initiatives over the last several months.  It will be interesting to see how the two trade organizations compete for the affections of the same constituents.  One gap that we have noted in ASF’s strategy over the past several years was a tendency to cater too easily to the larger and more established members and industry participants, often at the expense of the more grass-roots, organic and entrepreneurial segments of the industry.  Going back to the earliest days of the ASF, it was the most creative parts of the industry that disproportionately fueled its rapid growth and thereby the success of the trade group.  Although the current leadership of the SFIG board is made up of many of the same industry leaders, one would hope that as the recovery of the markets continues, more attention will be paid to new ideas and new strategies on a variety of fronts.

Here’s a full list of the new SFIG Board of Directors:

— Chair: Reggie Imamura, PNC Financial Services Group

— Deputy Chair: Christopher Haas, Bank of America Merrill Lynch

— Secretary: Jordan Schwartz, Cadwalader, Wickersham & Taft LLP

— Treasurer: Gregg Silver, 1st Financial Bank USA

Executive Committee

— Tom Davidson, GE Capital

— Howard Kaplan, Deloitte & Touche LLP

— Valerie Kay, Morgan Stanley

— Samuel Smith, Ford Motor Company

— Kevin Sweeney, Discover Financial Services

Board Members

— Jim Ahern, Societe Generale (AFME member)

— John Arnholz, Bingham McCutchen LLP

— Bob Behal, Vanguard

— Allan Berliant, GMO LLC

— Andy Berman, Fortress Investment Group LLC

— Christopher DiAngelo, Katten Muchin Rosenmann LLP

— Sean Dobson, Amherst Securities Group, LP

— Dave Duzyk, JPMorgan Chase & Co.

— Pat Evans, Wilmington Trust Company

— Bill Felts, Citigroup, Inc.

— Lisa Filomia, Ernst & Young LLP

— Tom Finke, Babson Capital Management LLC

— Steven Grundleger, Ocwen Financial Corporation

— Tricia Hazelwood, Mitsubishi UFJ Financial Group, Inc.

— Jay Kim, Credit Suisse Group AG

— Jason Kravitt, Mayer Brown

— Gary Horbacz, Prudential Investment Management

— Steve Kudenholdt, Dentons

— Pia McCusker, State Street Global Advisors

— Claire Mezzanotte, DBRS Inc.

— Tim Mohan, Chapman and Cutler LLP

— William Moliski, Redwood Trust, Inc.

— Doug Murray, Fitch Ratings

— Ned Myers, Lewtan

— Christopher Pink, Wells Fargo Bank N.A.

— Saul Sanders, Shellpoint Partners LLC

— Brad Schwartz, Blue Mountain Capital Management LLC

— Faith Schwartz, CoreLogic

— Susan Sheffield, General Motors Financial Company, Inc.

— Diane Wold, Two Harbors Investment Corp.

Industry Sees More Upside for CLO’s in 2014

According to a recently completed survey conducted by the Loan Syndications and Trading Association or “LSTA“, loan industry participants are very bullish about the continued growth in leveraged loan sales to non-bank investors.  A growing number of institutional investors and funds are being drawn to the floating rate features of syndicated loans as a protection against rising interest rates.

These third party sales could reach as high as US$650Billion in 2014, according to industry prognosticators.  Certainly many of these sales are finding their way directly to investors and mutual funds continue to be active in the asset class.  However, this expected growth can only be good for the red hot CLO marketplace.  Looking ahead to 2014, despite the headwinds associated with deliberations around risk retention rules, between the combination of new CLO program activity and the refinancing of older CLO programs, most predictions have the market continuing to grow rapidly in 2014.  One analyst projects 2014 CLO issuance levels to exceed US$125Billion.

Is China Securitisation Market Ready for Liftoff?

Last week’s public commentary by the People’s Bank of China, the PRC Central Bank, regarding the nascent domestic structured finance marketplace, was a clear attempt to illuminate the importance of the financing technique to the continued development of the domestic economy.  First authorized by the Central Bank as an alternative method for raising capital among financial institutions several years ago, the more recent drop off in China’s economy and tightening credit are no doubt driving some of this strategy to re-push the securitisation button.

In the first few years of the Government authorized “pilot program” some Y70 Billion (US$11Billion) was issued (between 2005 through 2008).  The Government then went on to suspend the program following the US credit meltdown, only to reopen the market in 2011.  What we may now be seeing is a confluence of regulatory “comfort” about the merits of the financing tool and a growing need, as these structures become more economically efficient when compared to other sources of capital.

Observers may want to take note that some local market experts suggest that the China market could be as large as US$500Billion.  Compare that to the Euro market, generally viewed as the second largest securitisation market after the US, which is “only” a US$300Billion market.