Nomura came top of our poll among market players of who was the best RMBS bank in 2019, with 32.8% of the vote. Among respondents who classified themselves as issuers or investors, that rose to 41.2%. For Jack Kattan, head of asset backed finance, Americas, at Nomura in New York this is particularly gratifying. “This is not an issuer business, it is an issuer and investor business,” he says.
In 2019, Nomura’s continuous focus on both sides of the business, along with heavy investment in research, sales and trading, has paid off handsomely. According to Nomura, it was a lead arranger on 85 US RMBS deals, with a total value of $33.9 billion. On the issuer side, Nomura has been able to do numerous trades for repeat clients, while at the same time bringing new issuers to market for the first time.
“We have been fortunate to have been able to grow with our clients,” says Kattan. This is particularly true in the non-QM asset class, which in 2019 provided a large part of the growth of the overall RMBS market and scaled to new highs.
“We want to have an intimate relationship with our issuer clients so that we can institutionalize them and be true partners,” says Amit Rametra, head of securitized products and leveraged loan sales at Nomura in New York. Some of the bank’s deal highlights in 2019 include a $442 million Single Family Rental securitization for Amherst Residential, a $267 million securitization for Finance of America’s HECM Assignable Buyout Loans, a $756 million offering of STACR 2019-DNA3 Notes and securitization of more than $600 million Residential Transitional Loans across three transactions for Lending Home.
What is clear when looking at the list of deals that Nomura priced in 2019, is the number of repeat issuers with which it has worked. These include some of the biggest players in the business including Lone Star, Angel Oak, Deephaven and Freddie Mac. But the list also includes bringing new asset classes to the market, including a $256 million securitization of Reverse Mortgage Funding’s non-agency product.
On the investor side, 2019 saw the fruition of many years spent building and educating a dedicated RMBS investor base. The firm has created a non-QM symposium that brought together more than 100 unique investors at events in New York, Boston and Los Angeles throughout the course of 2019. “Our distribution capabilities of RMBS product are based on our investor education and on our investor relationships,” says Rametra. “We have spent a lot of time building this.”
Time is the best investment that Nomura’s RMBS team has made. Time with issuers, time with investors and time with each other. The leaders of the business — in banking, sales, syndicate, trading and research — have been together at the firm for nearly 10 years. This has allowed them to build the business holistically. They have also embedded their knowledge of their clients and of the clients’ assets.
“It is a very competitive environment, but we have managed to establish a level of incumbency in our business,” says Patrick Quinn, managing director, US Syndicate, at Nomura in New York. “Origination volumes in the non-QM space grew rapidly in 2019, so we needed to have a strong pool of liquidity to support that. Investor education was key in that it allowed our investor clients to be comfortable with the asset class.”
2020 has not been a continuation of 2019 for the overall US securitization business. But Nomura has continued to lead the market. “We saw the importance of getting the primary market for RMBS securitizations back open after the arrival of the COVID-19 pandemic” says Sanil Patel, managing director, asset backed finance, at Nomura in New York. “And we were at the centre of re-opening the RMBS market by leading two transactions for Cascade Funding Mortgage Trust in 2020, sponsored by Waterfall Asset Management; the first for $373 million priced in April, and the second for $455 million a month later. In addition, we led the first SFR transaction since the onset of COVID-19 for Corevest American Finance, pricing a $234 million securitization in May”.
Nomura’s strong performance in 2019 was built on its incumbent relationships with issuers and investors, strong sales, trading and research, and, above all, a deep commitment to the RMBS asset class.