Insights

Opportunity Zones: Potential Impacts on Structured Credit Markets

The Tax Cuts and Jobs Act of 2017 (the “Act”), perhaps the biggest legislative victory of the Trump Administration to date, re-wrote much of the country’s tax code, lowering both individual and corporate tax rates while amending various deductions for the first time in over thirty years. Initially, media and public attention were largely focused…

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Tariffs: Understanding the Effects on the U.S. Housing Market and Structured Credit

Tariffs and trade embargos have been a key piece of U.S. foreign policy for much of our history. From the nation’s founding through the early part of the 20th century, tariffs were regularly imposed to protect U.S. economic interests. While protectionist policies took a step back in the post-World War II era, they have come…

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Student Loan Debt: Impacts on the U.S. Housing and Structured Credit Markets

At $1.52 trillion outstanding, student loan debt is now the second largest form of consumer debt in the United States, behind only residential mortgages. This growth has been particularly pronounced among young borrowers. Between 2005 and 2014, average real student loan debt per capita for individuals aged 24 to 32 doubled from $5,000 to $10,000,…

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Falling Rates: Impacts on the Structured Credit Markets

As the U.S. economy continued to strengthen in 2018, the Federal Reserve raised its benchmark interest rate four times. With the market pricing in additional future hikes, interest rates rose throughout the year, culminating with the 10-year U.S. Treasury yield reaching 3.24% in November, a level not seen in over seven years. The steady march…

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Auto Lending: What to Make of the Recent Increase in Delinquencies?

In the years immediately following the 2008 financial crisis, the availability of consumer credit tightened dramatically. As a result, the personal balance sheet of the average American improved as consumers were forced to de-lever in the absence of financing options. However, while mortgage credit issuance, the largest form of consumer credit, came to a virtual…

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Government Shutdowns: Analyzing the Economic Impacts of a “New Normal” Negotiating Tactic

On January 27, 2019, President Donald Trump signed a stopgap bill to fund the federal government for three weeks. The bill ended the longest government shutdown in history, which kept 800,000 federal employees out of work for an unprecedented 35 days and shuttered most federal agencies. The prolonged shutdown was the result of partisan gridlock…

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Brexit: Potential Impacts on U.K. Housing and Structured Credit

The United Kingdom’s (UK) decision to leave the European Union (EU) by referendum in June 2016 (“Brexit”) has been dominating global news headlines ever since, not least due to the closeness of the vote (51.9% v 48.1% leave/remain), but also due to the fact that even now, almost three years since the referendum was first…

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The Decline of Retail: Implications for the CMBS Market

Retail bankruptcies and store closures have filled news headlines in 2018. Notable chains such as Toys-R-Us and Bon-Ton, ingrained in our culture and economy for decades, have gone into liquidation. Others such as Sears and Kmart have filed for bankruptcy after many years of weak performance. Store closure announcements seem to be a regular occurrence,…

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Leaving LIBOR: How Did We Get Here and What Comes Next?

The London Interbank Offered Rate, better known by its abbreviation, LIBOR, has been a key economic benchmark interest rate for decades. However, in 2017, the Financial Conduct Authority (FCA) announced it would phase out LIBOR, potentially impacting trillions of dollars of financial instruments linked to the rate, especially those in the structured credit and interest…

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Understanding CLOs: Exploring the Impacts of Various Dynamics on Market Spreads

With a potential wave of CLO supply hitting the market in October, largely from refinancing and reset transactions of existing deals, investors are preparing for a spread widening event. While it is almost assured that the refinancing and reset calendar will be heavy in October, the overall effect on market spreads is less clear. In…

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