This week, we start off by briefly reviewing the US leveraged loan market to date in 2019. We then turn to LIBOR and SOFR, and flag (spread adjustment) progress being made (really!). Finally, we shift to the intersection of the courts and DC to discuss why Volcker and litigation might limit banks’ ability to invest in […]
As we noted recently, because of recent litigation over whether term loan Bs should be considered securities, the implications for CLOs of the current interpretation of the Volcker Rule have suddenly become a critical issue. Fortunately, the SEC and a number of banking agencies are currently deliberating over potential amendments to the Volcker Rule providing an opening to address this potential issue.
This week’s issue covers SOFR Trends; Volcker, Litigation & CLOs; Trading Stats; LIBOR Tax Guidance
On August 20th, 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, while those amendments do not affect loans and CLOs, the agencies signaled that amendments to the part of the Volcker Rule pertaining to CLOs would be forthcoming sometime in the future.
This week we cover Equity, HY Volatility vs. Loan Stability; Volcker Returns; LIBOR I (Fed Speaks) & II (LSTA Explains)
This week we cover CLO Stat!; Benchmarks & Ducks; DOL & Loans; and Volcker Reboot
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.
The LSTA submitted a comment letter to Treasury Secretary Mnuchin on the issue of ownership interests on May 26, 2017
Collateralized Loan Obligation (Fact Sheet on CLOs and the Volcker Rule
Banks are working with the trade associations to develop a draft template to facilitate amendments to remove bond baskets from legacy CLOs, thus “Volckerizing” them.
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