LIBOR – The UK Beat Goes On

While it seems like the COVID pandemic has taken over every waking moment of our lives, the impending end of LIBOR marches ever onward. All signs point to a termination date for the troubled benchmarks at the end of 2021, pandemic be damned.

The purpose of this post is not to discuss the road to transition so far, though if you’d like to take a trip down memory lane, here is what we have seen. Instead, we wanted to bring your attention to the fact that, whilst the UK Financial Conduct Authority’s (FCA) momentum continues, COVID has created some bumps in the road, even on the journey to the end of LIBOR.

Rick Jones’ Interview with Law360

By Shannon Galvin on May 27, 2020 Posted in CMBS, Commercial Mortgage Finance, COVID-19

Last Friday, Law360 published its interview with Crunched Credit’s own Rick Jones as part of its Coronavirus Q&A series. In his interview, Rick discusses the effects COVID-19 has had on the commercial mortgage-backed securities market, reflects on how the current financial climate compares to that of the Great Recession, and contemplates the future of capital markets. If Rick’s blogs aren’t enough and you want to read more of his thoughts, you can find the interview here: Coronavirus Q&A: Dechert Real Estate Leader.

LIBOR: The Monty Python Parrot of Finance

By Rick Jones and Jonathan Gaynor on May 18, 2020 Posted in COVID-19, LIBOR

COVID-19 has driven anxiety over the LIBOR transition right off almost everyone’s top-of-mind list and yet the crisis is taking no notice of that lack of regard and soldiering on. The ARRC continues to beaver away, generating guidance and advice and otherwise proselytizing the need to get on with it and be ready for transition on January 1, 2022.

But are the markets listening? Look at our ardor! Except for special situations, the use of SOFR, to date, has been a political and not an economic decision for those who have elected to use it. There is little take-up in the real world and little enthusiasm for doing so. And what’s with the huge whoops a few weeks ago when SOFR’s March to the Sea was interrupted when the Fed backed off using SOFR in the Fed’s new $6 billion aid program for small and mid-size businesses? Run away! Run away! Back to LIBOR!

COVID-19 and the Great Shutdown – Some Comparisons with the Great Recession

By Jana Zupikova, Brandon Ovington and Haleh Rabizadeh on May 15, 2020 Posted in COVID-19

As we continue to do business in this new world, we have been working with clients to address some of the impacts of COVID-19 on their industries. One point of consideration that comes up is the unprecedented nature of the ensuing economic crisis on the real economy. As part of Dechert’s COVID-19 Coronavirus Business Impact Broadcast Series, Dechert global finance lawyers Jana Zupikova and Brandon Ovington speak to some of the key differences between the current “Shutdown” and the “Great Recession” that began in 2008; these will clearly have an impact on how we see businesses navigate the road to a post-Covid economy, and inform the legal solutions that clients may consider in addressing unprecedented challenges.

Oh TRO You Don’t . . .

By Laura Ciabarra and Jessica Bula on May 13, 2020 Posted in COVID-19, Foreclosure

In the latest installment of “Mezzanine Foreclosures in the Time of Coronavirus”, the Lender fired back at the Borrower’s injunction request, claiming that the Borrower had “squandered lifelines” thrown out to it over many months and that granting the stay would let the Borrower “benefit from a global crisis by evading the consequences of its own chronic failures, which pre-date COVID-19 by months, if not years”. Governor Cuomo made another guest appearance, issuing a new Executive Order providing further restrictions on foreclosures the night before the Lender filed its brief. Continue reading for our take on the saga so far: “Mezzanine Foreclosures in the Time of Coronavirus: Chapter 2”.

A Mayday on May Day . . .

By Laura Ciabarra and Jessica Bula on May 7, 2020 Posted in COVID-19, Foreclosure

Last week the New York Supreme Court answered an SOS from a borrower seeking a TRO to prevent a sale under the UCC in NYC that was scheduled to take place on May 1^st. For more information on this alphabet soup, read our OnPoint about new potential pitfalls for mezzanine lenders seeking to foreclose during the pandemic: “Mezzanine Foreclosures In The Time Of Coronavirus”

“I Was Just Following Orders”

By Rick Jones on May 3, 2020 Posted in CMBS, COVID-19, Financial Reform, Real Estate, Regulatory Complexity, Securitization, Structured Finance

My last commentary, Playing with Broken Toys in Coronavirus Land, touched on the notion that sometimes following rules can guarantee a bad outcome. I’ll leave more important musings about ethics and morality aside here (I still don’t have a clue about what Kant was nattering on about) and focus on the more mundane question of whether one should do what a contract says when the contract conflicts with the exercise of good judgment.

Playing with Broken Toys in Coronavirus Land

By Rick Jones on April 19, 2020 Posted in Commercial Real Estate, COVID-19, Financial Reform

I’ve been offline for a bit. An amalgam of writer’s block caused by the enormity of the Coronavirus mess – what can be said that’s useful – and the consequence of being wildly busy as everyone across financial markets tries to pivot to the new reality. Unburdened by any knowledge of science, medicine or epidemiology, I have been marinating in the output of such intellectually distinguished journals as The Sun, The Daily Beast, The Onion, The Mirror, The New York Post and Drudge on the daily ups and downs of our plague, its cost in blood and treasure and the disruption it has caused across all aspects of our life. Consequently, I have opinions but I’ve concluded they’re pretty damn worthless. We’re in uncharted waters, akin to those bits on a medieval map where the cartographers had no clue and wrote: “Here be Dragons.”

Crunched Credit’s First Podcast: Beds Without Heads

By Shannon Galvin on April 14, 2020 Posted in Commercial Mortgage Finance, COVID-19, Hospitality Industry

As part of Dechert’s COVID-19 Coronavirus Business Impact Broadcast Series, the Crunched Credit team has released its first-ever podcast: Beds Without Heads: Hotels in the Era of the Coronavirus. In this episode, Dechert global finance lawyers Krystyna Blakeslee, Jessica Bula and Haleh Rabizadeh expand on their recent Crunched Credit blog and discuss the impact of COVID-19 on the hospitality industry, including how travel bans, shelter-in-place orders and other measures have impacted lenders and investors in the sector. To read more, check out our post on the subject.

ARRC Recommended Spread Adjustment Announced

By Jonathan Gaynor and Alexis Frese on April 13, 2020 Posted in COVID-19, LIBOR

The LIBOR transition plods onward. Last Wednesday, the Alternative Reference Rates Committee (ARRC) announced its recommended spread adjustment methodology for cash products referencing LIBOR. Regulators around the world have been clear: interim LIBOR replacement deadlines might slip, but LIBOR’s days are still numbered. At the end of March, which feels like ten thousand years ago, the Financial Conduct Authority said that “[t]he central assumption that firms cannot rely on LIBOR being published after the end of 2021 has not changed and end-2021 should remain the target date for all firms to meet.” Amid the constant upheaval as a result of the coronavirus pandemic, isn’t it nice to know that some things aren’t changing?