Winner: Clifford Chance

In Europe, Clifford Chance continues to act for the originator bank as structuring and drafting counsel on the majority of CRT transactions in the market. It is in this role as structuring and drafting counsel that the firm has set the standard that the rest of the market follows. 

As has been the case now for many years, Clifford Chance remains the only law firm that has partners whose practice is primarily focused on CRT transactions. Jessica Littlewood and Timothy Cleary in London are, by a large margin, the leading lawyers in this market and between them act for almost every bank active in the European, Asian and Canadian markets.

Clifford Chance has by far the largest number of lawyers with expertise in CRT transactions. The firm has a deep bench, with 19 lawyers in London alone whose main practice is CRT transactions.

Clifford Chance also has a strong CRT practice in Frankfurt, as well as the only domestic CRT practice in Spain. The team is boosted by other lawyers in France, Italy, Luxembourg and Poland, all of whom have extensive experience in CRT transactions. 

In recent years, the Polish CRT market has grown rapidly after the inaugural transaction involving private investors closed in March 2022, and Clifford Chance has acted as structuring and drafting counsel on all of these private sector transactions. Two other Polish issuers are currently working on their inaugural CRT transactions, with Clifford Chance again acting as structuring and drafting counsel.

This is a continuation of a common theme from previous years, such as when Clifford Chance led the charge when the Greek CRT market opened and when the firm acted on the inaugural CRT transactions by US regional issuers, as well as acting for repeat issuers and financial intermediaries on numerous transactions over the same period.

Similarly, as insurers have continued to grow in importance as protection providers in the CRT market, it is Clifford Chance documentation which has emerged as the market standard for such transactions. It is also the case that, in those rare cases where Clifford Chance is not acting as drafting counsel, the drafting counsel nevertheless chose to use Clifford Chance documents as the starting point rather than their own templates. The reality is, whatever the structure or asset class, it is to Clifford Chance documents that other market participants look to, both legal and commercial, for their inspiration.  

In the last year, Clifford Chance has been at the forefront of CRT transactions with an ESG focus. For instance, Project Bocarte, a CRT transaction with ESG-linked coupon step-down incentives, won SCI's award for ‘Impact Deal of the Year’ last year.

This has continued, with Clifford Chance London acting as drafting counsel for IFC in respect of a recent CRT transaction in the form of an unfunded guarantee to Banco Santander Brail. The project aims to expand access to climate finance, with Santander being required to redeploy capital savings to increase its climate finance portfolio. This transaction was the first of its kind in Brazil, as Brazil's Central Bank only recently amended the local regulation to allow banks to use synthetic securitisations for regulatory capital optimisation.             

Clifford Chance has also been at the forefront of developments in the legal structures. For example, it was the first law firm to document European CRT transactions in the form of credit-linked notes issued directly off the originator bank's own balance sheet (at a time when everyone else was still using SPV issuers without considering whether that was the most appropriate structure for a given transaction), including devising collateral structures to address the resulting counterparty credit risk associated with such direct issuance structures.

In the last year, Clifford Chance has seen a growth of "ramp-up" structures, which allow issuers to increase the size of the underlying reference portfolio, with investors being obliged to pay for further notes as the portfolio is ramped-up. These structures increase the efficiency of a transaction from a bank's perspective, as they mean that the bank is not paying for protection it is not yet using. Again, Clifford Chance originally coined this structure and is to date still the only law firm that has drafted the documents for such CRT issuances.

Clifford Chance has also led the way in innovations that increase the speed of execution and decrease transaction costs for issuers. In particular, the firm has put in place CLN programmes that are used by all of the major UK issuers of CRT transactions. These programmes reduce the documentation required for each transaction to a single set of final terms for each issuance, resulting in more efficient negotiations and lower legal fees.

For the full list of winners and honourable mentions in this year’s SCI Capital Relief Trades Awards, click here.