Matt Weir and Cecile Hillary joined in 2017, to run trading and securitization banking respectively, joining existing securitization head Rob Scott in rebuilding an operation which had been on the back foot since the financial crisis.
2019 was the year when this effort started to bear its fullest fruit, but it’s not a flash in the pan — based on the bank’s extensive warehousing efforts, a strong push into commercial real estate, and an increasingly compelling trading business led by repo financing, 2020 looks good too.
Securitization markets today are increasingly about banking private equity, hedge funds, and fintechs, with the same clients showing up as equity sponsors, bond buyers, warehouse borrowers and repo counterparties, and active in assets that might be performing, non-performing, reperforming — or not yet originated.
This new environment increasingly demands a fusion of primary markets with secondary, with the same institution potentially acting as risk retention holder — a role pioneered by Barclays — senior debt provider, mezzanine distributer, securitization structurer, and repo counterparty for the ultimate buyers of securities.
The revamped Barclays operation is custom-made for these conditions, with Matt Weir’s team eager and competitive at financing positions up and down the capital structure, and hedge funds increasingly appreciative of the terms the bank can offer.
As full capital structure deals have become more prevalent in the new issue market, so the demand for financing on deep mezz, equity and excess spread notes has increased, and Barclays has been there to meet it. That takes balance sheet commitment — but also excellent distribution, an effort led by securitised products sales head Michael Narty.
Like many European-domiciled banks, Barclays is also a major issuer of risk transfer deals itself— potentially the largest in 2019. As it has built out its trading operations, it has also emerged as a major third party finance provider against risk transfer notes.
Barclays has long had a top tier CLO operation, usually placed second in the league tables in Europe after Citi, and it still does — but it’s not a business where a bank can rest on its laurels.
The CLO market is attracting more and more competition, and the services banks offer are looking increasingly commoditised, but at the same time, selling equity last year was far from easy, requiring arrangers to harness every drop of experience, distribution skill, and structuring innovation they can muster.
As with consumer securitization, tight integration between the trading desk, led by Travis Hayes, is key to the success of Ancea Gangea and Michael Clarke’s primary business. Sourcing equity has been the factor differentiating successful CLO businesses, and close integration between primary and secondary desks can help identify equity buyers and to generate new dealflow.
The business Barclays has yet to crack is CMBS, but the bank has made CRE lending a priority, underwriting commercial real estate exposures in straight debt, loan on loan, and structured repo format — these deals have yet to come out in classical CMBS format, but the right exit opportunity can’t be far away.
With a full suite of securitization products firing on all cylinders, and a strategic commitment to rebuilding a business around the demands of today’s market, Barclays is GlobalCapital’s Overall Securitization Bank of the Year.