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The Volcker Rule Amendments: What Do They Mean for CLOs

Earlier today the Federal Deposit Insurance Company (FDIC) and the Office of the Comptroller of the Currency (OCC) separately approved final rules amending rules originally published in November 2013 that implemented the Volcker Rule. Importantly, today’s amendments do not affect loans and CLOs. The FDIC signaled that amendments to the part of the Volcker Rule pertaining to CLOs would be forthcoming sometime in the future. Today’s amended rules are available here.

LSTA Newsletter: October 19, 2018

This week we cover Equity, HY Volatility vs. Loan Stability; Volcker Returns; LIBOR I (Fed Speaks) & II (LSTA Explains)

Volcker 2.0: The LSTA Comments

In May, the federal bank regulatory agencies and the SEC approved a sweeping 373 page proposal to revise the 2013 Volcker Rule and the proposal was formally published in the Federal Register in July kicking off a 90 day comment period.  This week, the LSTA submitted its comment letter, with one full day to spare!  Importantly for the loan and CLO markets, the proposal puts into play the issue of whether banks can own the debt securities of CLOs that hold bonds.  While not taking a position on this issue, the agencies requested comments on a number of questions, such as the definitions of “covered fund”, “ownership interest” and “loan securitization”, changes to any of which could result in the end of the current prohibition.

Comment Letter on Proposed Changes to the Volcker Rule

The LSTA submitted a comment letter on proposed changes to the Volcker Rule. Importantly for the loan and CLO markets, the proposal puts into play the issue of whether banks can own the debt securities of CLOs that hold bonds.  The LSTA’s comment letter focuses on two points.  First, it suggests that the final rule’s “loan securitization” […]

Risk Retention and Volcker: Washington’s Seven Year Itch

More than seven years after the passage of the Dodd-Frank Act, some of the resulting regulations imposed on CLOs are still being hotly contested.  Indeed, just this week the LSTA learned the identities of the three judges from the D.C. Circuit Court of Appeals that will constitute the panel presiding over the three-year old lawsuit against the SEC and Federal Reserve Board on the issue of risk retention.  Also this week, in response to the OCC’s request for comment on revising the Volcker Rule, the LSTA filed a comment letter addressing the prohibition on banks owning debt securities of CLOs that hold any amount of bonds.

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Search Results by Relevancy

The Volcker Rule Amendments: What Do They Mean for CLOs

Earlier today the Federal Deposit Insurance Company (FDIC) and the Office of the Comptroller of the Currency (OCC) separately approved final rules amending rules originally published in November 2013 that implemented the Volcker Rule. Importantly, today’s amendments do not affect loans and CLOs. The FDIC signaled that amendments to the part of the Volcker Rule pertaining to CLOs would be forthcoming sometime in the future. Today’s amended rules are available here.

LSTA Newsletter: August 16, 2019

This week we cover LIBOR-Good News and Less Good News; Docs Terms of Use; Delayed Comp Docs Released; Loans Mag Announcement

Loans Magazine – Summer 2019 Edition

This edition provides members with valuable content on the latest developments in the syndicated loan market. An article from David Chmiel of Global Torchlight Limited which explores “Current Geopolitical Trends Impacting the Loan Market”. We continue with a series of articles on the many aspects of the LIBOR/SOFR transition, an analysis of the secondary loan […]

LIBOR Fallbacks: Good News… and Less Good News

There is good news – and less good news – on LIBOR fallback language in cash products like loans, FRNs and CLOs. On the good news front, it looks like most cash products are now including fallback language in new deals. This is critical because many instruments will be outstanding when LIBOR ends after 2021, and if they don’t have good fallback language, there could be contract frustration (and litigation). However, on the less-good-news front, the fallback language is not always consistent (which may lead to a lot of work to determine exactly how each instrument would fall back) or workable en masse (which may lead to traffic jams as everyone tries to amend their deals at the same time). We discuss the fallback status of FRNs and loans below. (And we’d gently remind readers that several CLOs have gone “hardwired”, per LCD and Covenant Review).

Primary Delayed Compensation: Drafts Released

Yesterday, the LSTA released drafts of the LSTA trading documents to be used in connection with the new Primary Delayed Compensation Protocol. Below, please find links to the clean drafts and blacklines marking the changes to the current versions of the Par/Near Par Trade Confirmation and Standard Terms and Conditions for Par/Near Par Trades.

Primary Delayed Compensation Protocol

The Protocol applies to a “Primary Allocation” which is an allocation of new money by a syndicate desk in connection with either (i) a new issue syndication or (ii) an amendment of an existing Credit Agreement. In addition, the Protocol affects when-issued secondary trades by (i) changing what constitutes an Early Day Trade and (ii) […]