Under the terms of the banking industry bailout, Spain cannot use EU cash to compensate
junior note holders.
They are basically having the same discussions as we had a year ago, which is likely to see the owner put in a tiny amount of equity and wiping out the least secure debt," said one of Wind Hellas's former
junior note holders.
The effect on the
junior note holders is that principal payments are delayed until more senior note holders are fully paid.
As a factual matter, in each of the foregoing cases, if the junior lienholder had withheld consent to the sale of the property by the original borrower and had instead triggered a foreclosure, the foreclosure by the first deed of trust would have wiped out the lien of the second deed of trust, and there would have been little or nothing left to satisfy the deficiency owed on the
junior note.
It has already completed one transaction this year; the sale of a $116 million
junior note within a $369 million securitisation of mainly Dublin offices and retail assets to Northwood Investors, and has recently announced plans to sell two portfolios worth over $1.
7 million
junior note, with the $81 million senior note piece sold in this transaction to a separate account managed by Apollo Global Real Estate.
This bifurcation among TruPS should translate into a generally positive trend for senior CDO note holders and potentially negative for
junior note holders, as better capitalized banks are likelier to redeem and repay senior notes while weaker banks would be left in the pool to support the
junior notes.
This extension when coupled with the earlier discounted payoff of the
junior note is a terrific outcome for CapLease and our stockholders.
In the current transaction, HFF marketed the
junior note on behalf of the sellers, a venture comprised of Asian and European insurance companies.
Following the modification, Talmage was engaged as the exclusive advisor to Fillmore Capital Partners, LLC of San Francisco in the successful sale of their
junior note secured by the portfolio.
Fitch notes that to date, P&G has executed redemptions at a slower pace relative to the redemption capacity offered by the hedge fund assets, which may serve to preserve the diversified nature of the portfolio so as to mitigate adverse selection for the
junior note classes.
The default model was not re-run for the transactions as the outstanding ratings are either only 'AAAsf' and/or rated
junior notes are present with no subordination; the transactions do not have revolving periods; and a review of pre-determined performance triggers indicates the transactions displays stable asset performance.
