IFR Awards 2009 (PDF) - Barclays Capital

© Reproduced by Thomson Reuters 2009
SECURITISATION HOUSE
Barclays Capital
When Barclays purchased the US arm of Lehman Brothers, many felt the clash of cultures
would scupper the formation of a successful venture. But in the tough area of securitisation,
the bank proved adept at marrying the balance sheet of Barclays with the nimbleness of
Lehman, to create a well-balanced business that delivers a commanding global presence.
Barclays Capital is IFR’s Securitisation House of the Year.
The phoenix rises
Throughout 2009, Barclays
Capital proved adept at
manoeuvring through
the muddy waters,
particularly in the US, the
only region to have scored a
measured success in rehabilitating
the securitisation market.
“We entered the year at a time
when securitisation itself was being
viewed as the cause of the crisis,
primary volumes had fallen off a
cliff, there was no secondary market
to speak of and strong banks were
laying off their entire securitisation
groups,” said Michael Wade, head of
US securitisation at Barclays Capital.
Despite these headwinds, the
firm proved instrumental in
re-opening the US market with a
roster of TALF and non-TALF eligible
deals, esoteric structured solutions
and Federal Deposit Insurance
Corporation-sponsored workouts.
In Europe the bank was joint lead
on the only two RMBS deals to have
made it into the public arena. In
Asia it successfully structured and
placed a landmark lease receivable
for Indian Railways.
The result of all these trades was a
leading position for BarCap in the
global ABS league table. Excluding
self-funded trades, the firm had a
12.9% market share at the time of
writing, the highest it has ever
achieved.
BarCap particularly distinguished
itself in first time issuance, both by
asset class and issuer. It was the
frontrunner in re-introducing ten
different asset classes to US market
in 2009. The next closest competitor
re-introduced six asset classes and
no other underwriter re-introduced
more than four.
It was also adept at leveraging its
first time asset-class strengths to be
the underwriter of choice for issuers
coming to market for the first time
this year. The bank acted as lead
manager for 20 separate issuers’
2009 inaugural deals (excluding selffunding),
again illustrating its
leadership by a significant margin
over all other competition.
Even before TALF emerged,
BarCap had successfully distributed
the only two consumer ABS deals of
the year. In January and February, a
time when getting investors and
issuers to agree was probably at its
most challenging, BarCap was the
only bank to have distributed public
market term transactions. It acted as
sole lead, identifying an interested
investor base first for Honda and
then for Nissan.
It took a lead position in educating
the Federal Reserve on the securitisation
market and in the subsequent
development of TALF. TALF is likely
to be deemed a success, but it should
not be forgotten that it got off to a
slow start. This was exemplified by
an industry-led initiative aimed at
creating a standardised customer
agreement falling flat on its face.
By working closely with hedge
funds and other leveraged players, it
was BarCap's straightforward
customer agreement that was
ultimately adopted by the street.
“Our form is 95% of that standard
and subsequent changes were really
only tweaks,” said Wade.
With TALF up and running the
firm maintained momentum:
excluding self-funded, it took a lead
role in about 30% of 2009’s TALFeligible
trades, putting it among the
top tier. Among non-TALF eligible
trades, it was the first dealer to successfully
distribute deals across the
equipment, student loan, and
timeshare sectors.
Helped by the esoteric structuring
skills acquired through the US arm
of Lehman Brothers, it worked on
many innovative structured
solutions. The Tribune Receivables
DIP facility (IFR’s Americas
Securitisation of the Year) was
among the hallmarks, being the first
to get an investment grade rating on
a DIP, a remarkable feat in light of
Tribune’s earlier filing for
bankruptcy protection.
BarCap subsequently closed a
similar US$270m DIP facility for
AbitibiBowater, which only two
months earlier had also filed for
bankruptcy protection. The funding
solution provided 364-day term
financing with two three-month
extension options.
Among other highlights, BarCap
worked closely with American
Express to restructure its credit card
master trust, preserving the
programme’s Triple A ratings and
thereby enabling it to continue
issuing TALF-eligible securities.
Elsewhere in cards, it was joint lead
on World Financial Network's 2009-D,
the first TALF card deal with a bullet
maturity of longer than three years.
In student loans the firm optimised
Sallie Mae’s SLMA 2009-D by moving
the call to 49 months from 36,
thereby providing a more balanced
maturity schedule. In the equipment
lease sector it worked closely with
beleaguered borrower CIT, putting in
place a back-up servicer arrangement
on its 2009-VT1 deal to address
investor concerns in the event of the
borrower's bankruptcy.

© Reproduced by Thomson Reuters 2009
SECURITISATION HOUSE BARCLAYS CAPITAL
In autos, the staple product of TALF,
BarCap significantly increased market
share, being involved in roughly 40% of all
2009 trades. When World Omni came back
to the dealer floorplan market after a fiveyear
absence, BarCap structured the trade.
The result was the first Triple A rated deal
in this space for two years.
The bank also played a lead role in the first
non-TALF auto structures for Avis and Hertz.
Avis’s AESOP 2009-2 was the first Triple A
rated rental car ABS deal since 2003. BarCap
also acted as joint bookrunner on Mercedes
auto receivables 2009-1, the borrower’s first
public deal since 1998 and one that achieved
the tightest all-in WA-spread in the auto loan
space at the time. The analysis that it
performed on BMW’s Vehicle Lease Trust
2009-1 around vehicle residual values was
rewarded by the rating agencies giving
considerably tighter credit enhancement
levels than was initially proposed.
BarCap also worked closely with the
FDIC in providing analysis and valuation
to engineer loss-sharing structures on
significant bank failures, including
IndyMac, Irwin and Corus Bank.
“We have been proactive in staying close
with the FDIC and providing liquidity to
back the assets of failed institutions,” said
Jay Kim, managing director of the BarCap's
US securitisation business.
As part of this process, the firm
encouraged the FDIC to “think like an
issuer” and consider whether to sell
acquired assets via an auction or a re-remic
structure. Consequently the FDIC will
package whole loans and is expected to
market a re-remic structure shortly.
All around the world
In Europe, BarCap worked as joint lead on
Permanent 2009-1 (IFR’s EMEA
Securitisation of the Year) and
Nationwide's Silverstone 2009-1, the only
RMBS deals to have been publicly placed in
the region in 2009. But away from these, it
structured a significant number of deals for
clients to tap central bank funding.
In Asia-Pacific the bank’s landmark
securitisation was the Rs11.5bn (US£225m)
lease receivable Indian Railway Finance
Corporation deal. Despite being India’s
largest deal of the year, it was structured,
rated, documented and marketed in just
two weeks.
The deal gained a substantial order book
of Rs28.8bn (US$558.8m) with mutual
funds, financial institutions and insurers
all receiving final allocations. It featured
issuance of 10 rated zero-coupon, passthrough
certificates that were structured to
attract specific pockets of local investor
demand.
“Barclays was able to build a strong order
book, and, despite uncertain market
conditions, helped IRFC meet its pricing
objectives,” said IRFC managing director
R Kashyap on the deal’s completion.
Elsewhere, in Australia, it structured deals
for Resimac and Interstar to access AOFM
funding.
Barclays’ ABCP conduit commitments
total approximately US$20bn, placing it in
the top ten globally. While not the largest,
the firm uses them effectively and does not
throw its balance sheet weight around to
get business. The firm’s ability to be a top
league table player without an outsized
conduit presence speaks volumes about
the strength of its banking, sales, trading
and research franchise.
The fully integrated sales, trading and
research team of over 100 dedicated securitisation
professionals has much to vaunt.
The bank’s ABS trading desk is an active
player across all asset classes, averaging
more than US$2bn in flow per month
throughout 2009, across both consumer
and esoteric asset classes.
The firm is also a top trader of mortgage
paper, including agency and non-agency
mortgage, performing and non-performing
collateral. It is among the most active
trading houses in the synthetic structured
products space.
Twinned with its robust trading platform
is its fixed-income global research team,
which has been augmented by the
highly regarded Lehman team. It has
consistently won third party awards over
much of the past decade.
The commitment and success of
Barclays’ securitisation team may also be
partly due to its place within the organisational
structure of the firm. It sits within
the core investment banking group,
alongside the Debt Capital Markets, Equity
Capital Markets, Derivatives and
Restructuring groups.
“Our bankers are trained to know how to
fund across markets and give the client the
best solution, eliminating competition
among product offerings within asset
classes,” said Wade.
David Stern, William Thornhill