Magnus Wilson-Webb, Managing Director, Strategy for BNY Mellon
Magnus Wilson-Webb will be joining iGlobal’s 3rd Securitization Finance Summit as a speaker on the Investment Opportunities in the European Securitization Market panel. As a strategy manager within BNY Mellon’s Investment Services business, Magnus is interested in monitoring structured credit markets to identify emerging trends and ensuring their service offering is tailored appropriately, and is looking forward to sharing these experiences with the attendees at the event on November 13th.
Q: How have the trends in European investment opportunities and deal flows changed in your experience?
A: ABS issuance has declined dramatically in the last few years as a result of consumers deleveraging and the availability of cheap bank funding through the ECB and facilities such as the Funding for Lending scheme in the UK.
Q: How has the resurgence of the small market of European CLOs changed the market?
A: CLOs are an important source of financing in the leveraged loan space so it is encouraging to see this resurgence, albeit a relatively small one, in Europe. CLOs play a vital role in allowing non-banks to participate in the loan market.
Q: How will CLO managers maintain 5% risk retention? Have new credit structures and investing in loans through funds been successful?
A: Increasingly, CLO managers are hedge funds or private equity firms, so they have access to capital. However, they still need to consider whether meeting the 5% risk retention requirements is the best use of that capital. The emergence of loan mutual funds and loan ETFs broadens loan market participation further and is an increasingly important contributor of funding for this asset class. Loan mutual funds have increased their share of the leveraged loan investor base rapidly in the last few years as investors search for yield. However, as the yield curve steepens, it will be interesting to see if the inflow to loan mutual funds continues, or if investors move back to more traditional asset classes.
Q: What is the cause of the variance in value between different asset classes and structures in different markets?
A: There are obviously a number of factors, but I think regulatory considerations are key contributors. Whether a particular asset is considered a High Quality Liquid Asset under the Basel III Liquidity Coverage Ratio definitions will affect banks appetite to purchase these assets. Target II proposals have a similar effect on investment decisions in the insurance sector.