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JRR: Not All About Risk Retention

They say, “If you’re a hammer, everything looks like a nail.”  And maybe if you are a CLO manager, “every regulation must be about risk retention.”  That seems to be the case with respect to the Japan Financial Services Agency’s (“JFSA”) recently published regulatory capital rule (the “Rule”) on securitizations.  To be sure, an important part of it touches on risk retention but a deeper dive suggests that the JFSA’s focus extends to the due diligence practices of Japanese banks and the asset quality of the loans in which they are investing through CLOs.  Furthermore, the JFSA has structured the Rule in such a way as to give themselves a significant amount of leeway in interpreting and enforcing the Rule.  Stated differently, it appears that the uncertainty in the Rule is a feature, not a bug. Let’s take a look.

Japanese Risk Retention for CLOs?

Will there be Japanese Risk Retention for CLOs? Last Friday, the Japanese Financial Services Agency (JFSA) published its long awaited final rule (the Final Rule) on risk retention/capital costs for investments by Japanese investors in securitizations (including CLOs).

Japanese Risk Retention/Capital Rules Published

Late last night (US Eastern time) the Japanese Financial Services Agency (JFSA) published its final rule and related FAQs on capital charges relating to investments in securitizations.

Japanese Risk Retention: The LSTA Weighs In

Early this week, the LSTA submitted a comment letter to the Japanese Financial Services Agency (“JFSA”) responding to its recent proposal to impose significantly higher capital charges on Japanese investors who purchase interests in certain securitizations that are not risk retention compliant. (For the Japanese language version of the comment letter click here and for the English language version click here).

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Mark-to-Market Monthly November Summary

Last month in this space we boldly wrote “there is a silver lining for loans: they appear to be oversold”. And sure enough, following its worst monthly print this year (-0.45% in October) the S&P/LSTA Leveraged Loan Index (LLI) produced a four-month best 0.6% November return.

Demystifying the LSTA’s SOFR Concept Credit Agreement

Last week the LSTA hosted its Demystifying the LSTA’s SOFR Credit Agreement webcast presented by Jeffrey Nagle of Cadwalader, Wickersham & Taft LLP, the LSTA’s project counsel, and the LSTA’s Tess Virmani.

Semi-Annual Oil & Gas Industry Update Presentation

Energy finance practitioners from Haynes and Boone, LLP will discuss current energy finance topics, including the latest trends in oil and gas finance. The presentation was done by Eli Columbus, Partner, Bankruptcy Practice Group, Kraig Grahmann, Partner, Energy Finance Practice Group, Kim Mai, Associate, Commodities Trading & Finance Practice Group & Jeff Nichols, Co-Chair of […]

LIBOR: The Future of Forward Looking Term SOFR

The syndicated loan market would really like an IOSCO-compliant Forward Looking Term SOFR to develop. If such a rate developed, it would solve several problems inherent in SOFR.