The LSTA and LMA held their 5th Annual Joint Documents Teach-In in New York City, which covered the latest trading documentation developments and many current European and US loan market legal and regulatory topics. Elliot Ganz, General Counsel of the LSTA, Deborah Festa and James Warbey of Milbank reviewed how the European and US loan markets were adjusting to new regulation.
The newsletter mentioned that, “the story of the 2013 Leveraged Lending Guidance and its impact on banks’ lending is still unfolding and may be more clear after the results of the SNC Reports are released in 2Q14. After outlining the theoretical and practical methods for satisfying European risk retention requirements, the parties commented on the BOE/ECB Discussion Paper, entitled ‘The case for a better functioning securitisation market in the European Union’ which was released last week, noting that at least European securitization regulation won’t get any worse than its current state.
Finally, Ms. Festa reviewed the compliance options for new CLOs which include reliance on Rule 3a-7 for exemption from registration under the Investment Company Act. Non‑reliance on the loan securitization exemption means that bonds and other securities could remain in the CLO portfolio. Ms. Festa noted that, although only a few CLO 2.0 deals are Rule 3a-7 compliant, there is a growing interest in this alternative by market participants.”
