May 18, 2017 - The question “How will President Trump change lending?” has been on our minds lately – and this week was no different, as we (along with Sidley Austin partners) discussed “The (Loan) World According to Trump”. What was different this week was that, in addition to our usual political analysis, we also dissected several devils in several details. First, as discussed below, we analyzed the interplay between Leveraged Lending Guidance and actual leveraged lending practices. Second, in a nearby article, we examine the misery that is flood insurance (and suggest there may be a solution).
May 18, 2017 - An obscure and burdensome rule that requires banks to ensure that real property collateral be insured under the National Flood Insurance Program (“NFIP”) may be going down the drain. The rule requires federally regulated lenders to determine whether improved real property collateral securing a loan is located in an area designated by the Federal Emergency Management Agency (“FEMA”) as being subject to special flood hazards (“SFHA”), and, if so, to ensure that adequate flood insurance covers the structure. The obligations on the banks kick in through a number of “tripwire events” such as making, increasing, renewing or extending a loan (perhaps appropriately called “MIRE”). (See slide 29 of The (Loan) World).
May 18, 2017 - In response to the strong recovery of the European leveraged finance market and the rise of borrower-friendly conditions that have been imported into the European market, the European Central Bank released its final guidance on leveraged transactions on May 16th. Approximately six months in the making, the guidance comes after a public consultation period on the draft guidance from which many, but not all, industry comments were accepted.
May 17, 2017 - On Tuesday, the LSTA hosted a CLE presentation by Haynes & Boone, Is There Light at the End of the Tunnel for Oil & Gas Companies? Unlike the last two years which saw one of the deepest dives in the U.S. oil & gas industry, 2017 seems brighter. Oil prices have stabilized at about $50 per barrel and, moreover, oil & gas companies have cut their operating expenses in half permitting profitability at oil prices where they might not have broken even before the recent oil price crash. Further good news is that the crude market is currently in deficit and demand is set to outpace production through the end of 2017.
May 16, 2017 - We will not be publishing the revised LSTA trading documents this Thursday, May 18th, and instead will plan to publish them on Friday, June 9th. While there is still a chance that the Department of Labor's Fiduciary Rule will be further delayed or amended, at this moment, the Fiduciary Rule will take effect on Friday, June 9th.