North America Structured Finance House: Barclays

IFR Awards 2021
5 min read
Richard Leong

Growth in a pandemic:
In a record year for US dollar securitisation issuance, Barclays leveraged its expertise and balance sheet to introduce new issuers to the market and helped dealmaking recover from a 2020 that was roiled by the pandemic. Consolidating its top-tier market position, the bank is, for the second straight year, IFR’s North America Structured Finance House of the Year.

Barclays, which has been a dominant bank in the non-traditional asset-backed sector, stepped up its game in residential and commercial mortgages in 2021 to broaden its presence across the US structured finance market.

Barclays and other banks cranked out more structured finance deals than ever last year, recovering from a sub-par issuance year in 2020 due to Covid-19. They aided private equity giants like Blackstone and KKR to refinance billions of dollars of debt at historic low interest rates and raise cash for acquisitions; and they lined the coffers of fledging companies with cheap, long-term funding to expand their businesses. Investors eagerly loaded up on securitised paper for its relative safety and steady income.

The competitive landscape evolved from the early days of the pandemic, where the emphasis was simply on getting securitisations over the line, to one where issuers expected to receive the best execution for every deal.

"This year was very different. It's been about implementation. It's been about sustained excellence. It's been about going to work and delivering every single day, every single week," said Marty Attea, global head of securitised products origination at Barclays.

Annual US dollar ABS supply surged to a record high of US$298.6bn in 2021, according to Refinitiv figures, up nearly 54% from the prior year when Covid-19 ground the primary market to a near halt for several weeks. Private label CMBS and RMBS issuance also reached all-time highs of US$149.1bn and US$208.6bn, respectively.

The UK bank rose to the top of the IFR US dollar ABS league table that excludes self-funded deals and CLOs, brushing past its larger US rivals.

Barclays’ dominance in whole business securitisation contributed to its impressive ABS ranking. It structured and left-led nearly 75% of the US$14.6bn deals issued this year. It oversaw the biggest WBS deals of 2021, the US$2.35bn refinancing for doughnut and ice cream shop franchiser Dunkin’ Brands. It also structured and ran the books for the ABS debuts of gourmet cake retailer Nothing Bundt Cakes, casual dining chain Zaxby’s and home services provider Neighborly.

Much of that WBS issuance was used as a buyout tool. "The theme of using acquisition financing to do deals is something we have been front and centre on," Attea said.

Barclays also had a formidable footprint in the growing securitisation of cell towers, data centres, fibre-optics and digital assets. Barclays was the joint structuring adviser and joint bookrunner with Morgan Stanley for the first at-home fibre transaction – the US$1.34bn HWIRE 2021-1 for Hotwire. It also was involved with the inaugural data centre-backed offering in the CMBS market, a transaction that partly funded Blackstone’s US$10bn leveraged buyout of QTS Realty.

Barclays held on to its significant presence in the digital infrastructure even after a group of its ABS bankers left for Morgan Stanley in the middle of the year.

Outside of the two esoteric categories, Barclays played a key role along with Deutsche Bank in arranging a multi-billion financing package for Hertz to emerge from bankruptcy in June. That paved the path for the car rental operator’s blockbuster return to the ABS market: its US$4bn Hertz Vehicle Funding III 2021-1 and 2021-2 marked the largest ABS deal since the 2008 financial crisis.

The bank also made strides in its RMBS business, helped by the sizzling consumer and investor demand for single-family homes as the pandemic’s grip on the market eased.

Among its notable successes in the residential mortgage space was being selected by Freddie Mac as the lead dealer for the inaugural tender offer of credit risk transfer securities, where the mortgage agency retired US$1.63bn in debt to reduce its financing costs.

Barclays was a bookrunner with Deutsche Bank on short notice for the first social non-qualified mortgage RMBS from Angel Oak Capital, whose Angel Oak Mortgage Trust 2021-2 raised US$223.7m in May.

"It showed how Barclays works seamlessly across the firm. We are huge in the ESG space in Europe and we were able to confirm our ability to be on the book within 24 hours," said Joseph O'Doherty, Barclays' head of residential mortgage origination.

In a robust year for securitisation, Barclays came out on top due to “hustle, hard work, great ideas and execution", Attea said.

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