Loan Syndications and Trading News

June 22, 2017 - This week the House Committee on Financial Services took the first step in a process that could reverse an obscure and burdensome provision of a law that requires banks to ensure that real property collateral be insured under the National Flood Insurance Program (“NFIP”).  The law requires federally regulated lenders to determine whether improved real property collateral securing a loan is located in an area designated by the FEMA as being subject to special flood hazards (“SFHA”), and, if so, to ensure that adequate flood insurance covers the structure.

June 22, 2017 - It has been a cool start to summer for issuers.  The secondary market continued to soften, several loan and HY bond deals have been pulled, and several others have seen terms move in favor of investors. That said, it’s a little early to suggest the market is turning away from issuers. Moreover, in recent months we seen several instances when technicals turned (briefly) in favor of investors, only to return to their issuer-friendly ways in a matter of days. Only time will tell whether the summer solstice ushered in a more permanent shift.

June 21, 2017On Tuesday, the LSTA hosted a webcast presentation, “It’s Always Better to Be Direct: A Guide to Direct Lending” presented by Latham & Watkins partners Andrew Fayé and Jane Summers.  Middle market lending has traditionally been primarily through balance sheet banks, but in recent years, direct lenders have evolved from participants in club deals to leading deals for top tier sponsors.  Unlike banks many direct lenders are unregulated and, at the very least, direct lenders are not affected by the Leveraged Lending Guidance.  The direct lender’s business model is also different from that of arranging banks – the direct lender is relying on returns from the loan itself rather than fee income.

June 19, 2017 - U.S. secondary loan trading volumes increased 18% during May to $57.6 billion after falling to a five-month low in April.   And after a very busy May (the second busiest month in two years, the first being March 2017), trading volumes have totaled $631 billion over the last twelve months. This is a remarkable $23 billion higher than 2014’s record of $608 billion.  This recent surge in volumes has pushed the market’s 12-month turnover ratio back above 70% (to 72%, to be exact) after registering a multi-year low of 68% across 2016.

June 14, 2017Recently, two important financial regulatory reform efforts were launched, each of which was large in scope and could have important ramifications for the loan market and beyond.  As reported by the Wall Street Journal, on June 7th, the House of Representatives passed the CHOICE Act, a sweeping bill that would repeal much of the 2010 Dodd-Frank Act. 

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