Irish bridge

Issuer substitutions

Category: CLOs Regulation

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VAT reversal results in redomiciled CLOs

A number of CLO managers have redomiciled their European deals from the Netherlands to Ireland, following the change in interpretation of VAT law by the Dutch tax authorities in connection with CLO management and administration fees (SCI 24 February 2020). Most of the transactions affected by this change – estimated to account for around 30% of European CLO SPVs – are believed to have triggered the substitution clause in their documentation, whereby issuers can be substituted if required for tax purposes.

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