Loan Syndications and Trading News

August 3, 2016 - The 2016 Shared National Credit Review, published last Friday, had good news and less-good news in it. We discussed the good news in the LSTA Newsletter last Friday: In short, banks are almost entirely conforming with the Leveraged Lending Guidance when they originate loans. So, this week, we focus on the “less-good” news.

July 27, 2016 - The impact of risk retention has been mostly analyzed for two constituencies: Managers (who must raise capital to meet the risk retention rules) and borrowers (who may see a decline in credit availability or an increase in credit costs). This week, Moody’s discussed the impact on a third constituency: Investors, who may face reduced asset diversity and increased portfolio correlation. We discuss the impact below.

July 20, 2016 - In early June, we learned that the European Parliament’s Committee on Economic and Monetary Affair’s (ECON) proposed amendments to the EU’s “STS” securitization rules were, shall we say, problematic. In a nutshell, the amendments had the potential to increase risk retention to 20% and to effectively prevent US CLO managers from issuing European CLOs and from accessing the European CLO investor base.

July 18, 2016 - Three weeks after Brexit rattled the world, CLOs are back and are adjusting. Secondary spreads have tightened, primary issuance has returned and UK CLO managers are contemplating how to do risk retention compliant deals if they are no longer “European” managers.

July 7, 2016 - With just two weeks to go before the deadline, the Board of Governors of the Federal Reserve (“FRB”) this afternoon released an order extending the conformance period for the Volcker Rule to July 21, 2017.  Although widely expected, had the FRB not acted, banks would have been forced to sell within the next two weeks any non-conforming CLO liabilities they held.

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