News
NatWest Markets prepares
for CLO arranging comeback
March 2021 | Issue 232
Hugh Minch
Reporter
NatWest Markets is planning its return as an arranger of European CLOs, officials tell Creditflux. The London-based investment banking arm of NatWest Group, formerly the Royal Bank of Scotland, is in the process of negotiating mandates for new primary market transactions. This comes a month after Creditflux reported that Mizuho had similar ambitions in European CLOs.
“We’re looking at a fair few new issue and refinancing deals,” says Miles Hunt, head of private credit syndication at the bank. “The pipeline is starting to shape up, but these are early days”.
The bank was a major player in the early half of the last decade, arranging 24 European CLO new issues between 2010 and 2015, according to CLO-i. In the latter half of the decade the team was behind more esoteric transactions — including the only sterling-denominated CLO of the era for PGIM, Dryden 63 GBP CLO 2018, and a securitisation backed by Spanish SME loans for Be-Spoke Capital, Alhambra SME Funding 2019-1.
“The pipeline is starting to shape up, but these are early days”
Miles Hunt, Head of private credit syndicate | NatWest Markets
“We would like to be mainly known for middle-of-the-fairway transactions and hopefully land some of the more mainstream managed European CLOs. But at the same time, having a reputation as one of the few banks that can do those more complicated deals gives us an edge,” says head of CLO structuring Luca Giancola.
The bank faced headwinds in 2020 amid a restructuring process that wound down its securities business, with CLO trader Antoine Dulucq and ABS trader Eric Huang among those departing last year on the secondary side.
The team suggests its relative inactivity in 2020 has led to renewed interest from clients in its CLO offering, as managers with warehouses open with rivals amid the covid-19 market shock experience a once-bitten, twice-shy effect.
“I would be surprised if we see mark-to-market warehousing being used in the future, as well as certain structural features like mark-to-market-style triple C events for non-mark-to-market warehouses,” says Giancola.
Away from market-standard CLOs, NatWest officials say there are opportunities in transactions backed by government relief schemes, such as the European Investment Fund and European Investment Bank’s schemes in Europe, or the Coronavirus Business Interruption Loan Scheme in the UK, which could support small or middle market lenders to securitise a non-tradeable portfolio.
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Global credit funds & CLO's
March 2021
| Issue 232Published in London & New York.
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