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Loan Syndications and Trading News

We were delighted to host 1,100 members (and future members) at the LSTA’s Annual Loan Conference on October 24th. As befits the times, the conference focused on Managing Risk (today) and Optimizing the Future. Below, we discuss the themes that surfaced during the day, offer the main takeaways and, of course, thank our attendees and 28 sponsor and exhibitors. Most presentations are available on this presentation page of www.lsta.org. 

October 22, 2018 - Today the LSTA has published updated “LSTA Guidance: KYC Considerations for Syndicated Lending and Loan Trading”.  In the light of FinCEN’s new Beneficial Ownership Rule with which covered financial institutions had to comply by May 11, 2018, the LSTA’s KYC Guidance had received renewed attention from our members.  Because of this, we have updated that Guidance, and it now notes that primary lenders would not typically be required to identify and verify the identity of any guarantor under the applicable credit agreement.

October 18, 2018 - Last week marked one of the most severe equity market sell-offs in recent memory as the 10-year treasury yield spiked briefly above 3.25% for the first time since 2011.  During a span of three days, the Dow Jones, S&P 500 and NASDAQ all lost 5% of their value.  Furthermore, October 11th marked the third largest one-day plunge in the history of the Dow, while the NASDAQ recorded its biggest nosedive in seven years.  And despite better market sentiment on Friday, the S&P 500 went on to suffer its worst weekly loss since January 2016.

October 18, 2018 - On September 24th, the Alternative Reference Rates Committee (the ARRC) released a consultation on LIBOR fallback language for syndicated loans. On October 4th, the LSTA hosted a webcast that detailed the consultation. We also are releasing a series of briefs that explain the fallback consultation to help market participants respond to it. (The LSTA was one of the drafters, so we are very familiar with it.)

October 17, 2018 - On Tuesday, October 16th, the Financial Stability Oversight Council (FSOC) publicly discussed a number of market and regulatory issues. Top of the agenda (literally) was LIBOR. Federal Reserve Vice Chairman Randal Quarles provided an update on LIBOR (it’s shrinking), SOFR (it’s growing; note the latest JPM billion SOFR FRN) and fallback language (it should be adopted).

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