Deborah Festa and James Warbey, partners in Milbank, Tweed, Hadley & McCloy’s Alternative Investments Practice Group, were quoted in a recent Bloomberg Law article titled “European Investors Offer US CLOs Opportunity as Slump Looms.” The article covered the compliancy conditions required for firms to take advantage of the European market for CLOs.
“A deal can comply with European rules if the manager acts as a so-called originator; an entity that purchases an asset for its own account before transferring to a securitization,” according to James Warbey.
“A fund can be compliant with US rules, which take effect in 2016, if the manager is holding the risk or has a majority-owned affiliate that holds the required five percent of the deal,” said Deborah Festa.
Ms. Festa elaborates, “There are ways to thread the needle between the two regimes and make sure you comply with both.” “If the originator is also the manager or majority-owned affiliate, a fund may be compliant with both rules,” she said.
