North America MBS House: Credit Suisse

IFR Awards 2019
4 min read
David Bell

Solid foundations

In the mortgage bond sector, one bank stood out for the combined strength of its offering across both residential and commercial mortgages. For demonstrating innovation as well as impressive volumes, Credit Suisse is IFR’s North America MBS House of the Year.

Credit Suisse topped the Refinitiv league table for residential mortgage securitisations for a third year in a row, acting as a bookrunner on 94 deals in the awards period – double the number of the second-placed bank.

Non-qualified mortgage securitisations was the biggest area of growth in the residential space in 2019, with volumes more than doubling to over US$27bn in the year to November 15.

Credit Suisse was a go-to for several new non-QM issuers – including Pimco, which turned to the Swiss bank to arrange a US$382m debut backed by loans acquired on Capital One’s exit from the mortgage business.

It also structured debut deals for Seer Capital and Angelo Gordon, the latter of which included a completely new type of collateral in non-agency securitisation with the introduction of loans issued by community development financial institutions.

On top of that, the bank (whose team is led by global head of structured products Jay Kim) also played a leading role in the securitisation of agency servicing rights with deals for Two Harbors Investment Corp and Freedom Mortgage.

Several factors played into the diversification of the private-label RMBS market this year, which all but disappeared after the financial crisis.

A strong macroeconomic environment, continued house price appreciation and stable capital markets have all helped the market broaden in scope.

“This is driving folks to bring investment capital into new platforms and to use the securitisation markets for term financing,” said Peter Sack, head of mortgage finance at Credit Suisse. “That trend is probably going to continue.”

The bank has looked to get involved at every turn as new assets are brought to the market, with Sack highlighting the bank’s breadth across the growing types of mortgages being financed.

“There are banks that are involved in one spot or another, but there really isn’t a bank that is significantly involved in those half a dozen to 10 different structures other than ourselves,” he said.

As well as a table-topping position on the residential side, Credit Suisse also maintained a fourth spot in the league table for commercial mortgage-backed securities.

It maintained steady volumes of conduit CMBS as well as landing mandates on some interesting single-asset deals, such as a US$2.35bn transaction for Lineage Logistics that was the fourth biggest since the financial crisis.

The deal is backed by cold-storage warehouses and refinanced existing debt as well as financing the acquisition of Preferred Freezer Services.

Michael Dryden, global head of securitised products finance at the bank, said the closeness of the firm’s RMBS and CMBS teams stood out across the market.

That strength was highlighted when the bank won a mandate from Fannie Mae to structure a new type of risk transfer security for its multi-family loan portfolio in October.

This involved taking a structure that had been developed for Fannie Mae’s residential loan portfolio and applying it to a type of collateral that typically sits in the CMBS market.

Credit Suisse’s strength across both asset classes was demonstrated by the strong order book of investors across both RMBS and CMBS, drawn by a structure that appealed to both markets.

“No other firm is set up to have a crossover CMBS-resi conversation because they sit in different parts of the firm. At our firm they sit next to each other,” said Dryden.

“That’s why people come to us on those deals, because they want somebody who understands the market as well as we do, as well as the structuring side, and has the breadth of experience that we do.”

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