As is our tradition here at Crunched Credit, each year, about this time, we award our Golden Turkey Awards. Once again, I must say that we are blessed, blessed with so many worthy candidates. Our government, our courts, the regulatory estate both here and in Europe and around the world and the political class in general have once again vied with verve and imagination and breathtaking persistence to win a spot on our acclaimed list. For those of you who we must disappoint, please accept our heartfelt apologies. Yes, you screwed up and did stupid things breathtakingly well, just not as well as this year’s winners. Continue Reading
The way the new Basel III High Volatility Commercial Real Estate Lending Rule (HVCRE) was crafted, and is being enforced, is insane. We’ve written about this before. This is one of the purest examples of the regulatory apparatchik’s mule-headed refusal to look at data or engage with the banking establishment to develop thoughtful and effective rules. I think I saw a thoughtful and effective rule once. Continue Reading
Frequent subscribers of this blog may remember MiFID I coming into force on 1 November 2007, fundamentally revising the existing rules applicable to, amongst others, European firms providing portfolio management and broker dealer services in the EU. Continue Reading
The courts have been busy this year, handing down several key decisions which have affected the structured finance landscape. Among them are Omnicare, Ace Securities and Madden. In the grand tradition of the Golden Turkey Awards due out later this month (and without stealing any of their thunder), this post is a quick review of these important cases.
Dechert’s Antitrust Merger Investigation Timing Tracker (DAMITT) finds that significant antitrust merger investigations in the U.S. currently are taking 10 months which is about 30%−40% longer than in prior years. Continue Reading
As we begin to close in on the initial implementation of the Risk Retention Rule, we are looking beyond the headlines and trying to figure out how the Rule will actually work. The result is troubling. Continue Reading
The Great Equity Correction of 2015 that is now being enjoyed by all of us is a correction, and not the beginning, of the Great Bear Market of 2015 (from my lips to God’s ears). It reminds me of just how little we know about how all complex systems, like the global financial market (and don’t get me started on climate), function. Nonetheless, our Regulatory State behaves as if this was not true and as if wise governmental types can simply declaim new rules and regulations to get their very specifically-designed outcomes.
An increase of defaults and rising debts have Business Development Companies (BDCs) concerned as the trend may lead to a number of distressed credits within their portfolios. Specialists from Dechert and Houlihan Lokey will address these concerns and potential solutions which matter to BDCs during a webinar taking place on Wednesday, September 9. The webinar will focus on structuring issues (e.g., portfolio eligibility, valuations, MIP implications, etc.), tax considerations (e.g., distribution requirements, qualifying or good income test, asset diversification, etc.) as well as bankruptcy and restructuring concerns. Continue Reading
MERSCORP, Inc. (“MERS”) has been under fire for years. We wrote about it a while back when residential mortgage borrowers challenged the ability of MERS to foreclose on mortgages it held on the theory that MERS, as a mere nominee to the lender, was not a real party in interest. More recently, local recording offices have filed class action suits against MERS arguing that the MERS system prevented them from collecting fees supposedly required under state law. Now there’s a sympathetic plaintiff! In the past month, the Third Circuit and Fifth Circuit both rejected these arguments.
In anticipation of the effective date of the Final Rule on December 24, 2016 (early Christmas gift?), CLO market participants have been constructing solutions that allow collateral managers to raise the capital necessary to support investments required by the Final Rule.
We have seen an increased use of a hybrid structure that has been referred to as the capitalized majority-owned affiliate (C-MOA) which may be structured to comply with EU and U.S. risk retention requirements.
What is a C-MOA?
The C-MOA hybrid draws from the CMV and MOA options, yet solves some of the perceived challenges presented in both structures. Attorneys at Dechert have devised two C-MOA structures – one where the C-MOA both originates loans to be sold to the CLO and manages the CLO and a second where the C-MOA originates loans to be sold to the CLO but the CLO is managed by the existing collateral manager.
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