Nomura has been a force in the mortgage market for almost a decade. In 2022, its combination of agility, insight and dedication helped the firm to a suite of securitization awards. In addition to winning the coveted RMBS Bank of the Year, Nomura won for its exemplary securitization research and secured two separate awards for its ARMI 2022-1 transaction.
Since starting its mortgage business in 2013, the firm has built a reputation for being one step ahead of the market and its competitors. Astute strategy and unique financing structures have helped Nomura win business time and time again across a range of products, from non-performing and re-performing loans to agency and early buyout lending.
“Our playbook at Nomura over the years has been to grow with our clients and support the initiatives that they're trying to develop, whether it's bankruptcy loans, non-QM, single family rentals or residential transition loans,” says Sanil Patel, head of mortgage finance at Nomura. “Every time we’ve gone into an asset class in the mortgage business, the whole firm - research, trading, syndicate, sales - is all in. The more information you have on an asset class the better the job you can do for your clients.”
Every time we’ve gone into an asset class in the mortgage business, the whole firm - research, trading, syndicate, sales - is all in. The more information you have on an asset class the better the job you can do for your clients
The complexity and constant evolution across the securitization market means investors place great value on timely and insightful commentary. Patel says the strength of Nomura’s research team has been instrumental in the success of its structured products business.
“The feedback we get from our clients on our research is always extremely complimentary,” he says. “There’s a lot of trades that happen with clients driven by the research team’s views across agency and non-agency. As you can see from our award win, that’s highly valued by investors, issuers and aggregators.”
Nomura’s dominance in the RMBS and wider securitization space is all the more impressive given that it cannot match the global investment banks in terms of funding. Instead, the firm relies on agility and insight to stay ahead of its peers. “We have the capacity to move quickly with the market and shift focus into different products as we identify opportunities,” says Patel. “Our ability to manage clients across different situations puts us well above our competitors.”
Post-pandemic, this agility allowed Nomura to quickly recognise potential for business from non-bank servicers looking to fund buyouts from agencies. “We were able to tilt the business very quickly to support a great number of clients,” Patel says. “Nomura added several billion dollars of financing on an asset class that the rest of the market hadn’t really thought about.”
As the rate environment changed in 2022, the firm used the same dexterity to shift balance sheet into growth segments including single family rental (SFR) and reverse mortgages. “We were able to take a significant amount of market share in SFR because we could move quickly and make our views and potential support clear to clients,” says Patel.
The SFR space provided Nomura with one of its standout deals of the year, Amherst’s ARMI 2022-1, which was recognised as both the RMBS Deal of the Year and the Innovative Securitization Deal of the Year. Nomura acted as sole structuring agent, co-lead arranger and joint bookrunning manager.
The ARMI 2022-1 structure has its origin in Nomura’s pioneering work on residential transition loans (RTLS), where it created the first revolving trust structure for RTLs. This allowed investors access to longer duration securitization products and allowed issuers to use the capital raised to originate new loans and fund their business.
When Nomura looked at the SFR business, it identified similar dynamics and used similar technology to create a funding structure that complimented existing funding for SFR operators. “Being able to provide an issuer with an additional source of balance sheet outside of the banks is extremely valuable,” says Patel.