Contents

Structured Finance

Coordinating outfit

ESG advisors gaining traction

ESG advisors are gaining traction in the securitisation market, as sustainability becomes an ever-more import consideration for investors and issuers. This Premium Content article investigates what the role entails.

As sustainability becomes an ever-more important consideration for securitisation investors and issuers, the role of the ESG advisor on transactions is gaining traction. Not only do they assist issuers in understanding applicable risks and regulatory frameworks, but they also help clients align with investor requirements in a number of areas.

“The ESG advisor for securitisations makes sure there is coordination between various parties - ensuring consistency with market standards and understanding investor requirements. While this is relevant for all transactions, its extent depends on how far the issuer has progressed with the implementation of their own ESG strategy,” explains Emile Boustani, director of asset-backed products at Societe Generale.

The role of an ESG advisor is similar to the way in which issuers get advice from arrangers on how to market a transaction. In particular, an ESG advisor should have an in-depth understanding of the environmental, social and governance risks and implications relevant for a transaction, to help the issuer align with investor requirements in these areas.

Securitisation issuers are already confronted with a number of regulatory requirements under the Securitisation Regulation. If they choose to issue an ESG or green deal, the amount of regulation that they are directly and indirectly (via investors) faced with almost doubles. However, incorporating an ESG adviser can help them navigate through all these additional issues, especially in the case of first-time ESG securitisation issuers.

The concept of an ESG advisor is becoming increasingly popular and some market participants believe that there aren’t any instances where an ESG adviser isn’t required.

Rabobank claims that in its experience – which goes back to structuring the first European green securitisation in Obvion’s Green Storm 2016 - for any ESG or green securitisation transaction, the sustainable debt capital markets team always works closely with colleagues from the bank’s securitisation team. Margot d’Ancona Roesink, global head of sustainable capital markets at Rabobank, explains that the reasons for doing so are the ongoing changes and developments on the regulatory side.

For issuers, it is important to be informed on the latest developments, especially in the context of the EU Taxonomy. Over the past year, a great deal of ESG-related regulation has been introduced, and still more is anticipated in the coming years – which can be overwhelming for some clients.

She adds: “We assist our clients with the information that is specifically relevant for them. Not only the regulation that is currently impacting them, but also what could potentially impact them in the near future. Together with our securitisation team, we ensure that ESG or green securitisation can also be really labelled ‘green’.”

Providing some formal shape when crafting ESG-related KPIs for the issuer is one responsibility undertaken by an ESG advisor. Tim Conduit, partner at Allen & Overy, notes: “When trying to comply with the ICMA green bond principles, it’s important to bring some experience of how this works in practice, in order to bring some focus to carry out a sustainable securitisation.”

Indeed, the individual who is tasked with this role must have a high level of multi-tasking and organisational skills in order to be successful. They will also need to devise an ESG-compliant process for the issuer, consisting of a strong, dedicated team.

“There needs to be a transparent and objective process for the inclusion of ESG criteria, either in the choice of investments or in the origination process,” explains Benjamin Bouchet, director of structured finance at Scope Ratings.

Another key attribute required for this role is relevant knowledge of the asset class and an in-depth understanding of how ESG and sustainability piece together. At the same time, financial institutions also need to take sustainability in a financial context seriously.

Conduit notes: “It is important for them to understand how sustainability maps onto a securitisation, but also to have good experience of where the sustainable finance market is more generally and what investors are looking for - including what reporting investors might want to receive, which might be different to typical securitisation reporting.”

Ultimately, there is scope for the role of ESG advisor to become significantly more important across the securitisation market. But like most industries, there is a learning curve that needs to be adhered to.  As such, it is crucial that banks ensure that every employee understands the implications of ESG and sustainable finance, to make it an integral part of their skillset and to develop the ability to apply it to their respective area of activity.

Generally, the ESG advisor role is relevant across every asset class – albeit the sustainable securitisation market has so far been dominated by green and social RMBS bonds and to a lesser extent CMBS.

Benoit Vasseur, executive director of structured finance at Scope Ratings, points out that since 2018, the CLO space has been at the forefront of ESG criteria in its documentation. However, such activity has predominantly involved industry exclusion rather than setting a uniform framework to promote ESG within CLOs. He claims that if an ESG label is added, there is no reason for the asset class not to be categorised as Article 8 or even Article 9 funds – and, as such, attract even more investors.

Looking ahead, it is possible that some sustainable asset classes - such as green RMBS - may become more commoditised quicker than others. And for more commoditised transaction types, it may not always be necessary to have an ESG advisor.

Conduit concludes: “Arrangers have become more focused on this aspect. I think that most arrangers will, in due course, be able to provide this advice because sustainability is becoming a live question for almost every deal.”

Angela Sharda

ABS

Expectation gap

European ABS/MBS market update

Macro volatility continued to push European and UK ABS/MBS spreads wider last week in a quiet secondary market, with activity further hampered by differences in participants’ expectations. Meanwhile, the primary market remains side-lined.

“As the escalation of the crisis in Ukraine fuels further deterioration in the technical backdrop for financial markets, European ABS spreads extended their sell-off in secondary last week,” report JPMorgan international ABS research analysts. “Though trading activity has remained on the quieter side for the second consecutive week, and on the surface there remains relatively limited selling from investors, anecdotally there has emerged a dichotomy between levels demanded by prospective buyers (who are generally looking for distressed bids) and any sellers (who are not, yet, forced sellers) - which was last seen during the peak of the Covid-19 crisis in March 2020, and which renders the market somewhat stuck amidst the inability to close the gap in expectations.”

There were also differences between sectors in the magnitude of the spread moves seen last week. The JPMorgan analysts note that at the top of the capital structure indicative spreads on Eurozone cash surrogate seniors, including Dutch and French RMBS, autos, and consumer paper; ECB-eligible Spanish and Italian RMBS seniors; and most UK senior risk sold off 2-4bp last week.

Meanwhile, Irish RMBS, Portuguese RMBS, and Eurozone CMBS seniors ended the week 6-8bp wider. Further down the stack, widening across sectors generally ranged from 3-11bp, with Eurozone auto subs at the tighter end of the range at plus 3bp and UK BTL and NCF RMBS second pays, as well as Spanish RMBS subs, at the wider end at plus 10-11bp.

Now, the JPMorgan analysts conclude: “After a second straight week of sharp widening, and coupled with the slower drag wider in the first half of February, secondary spreads across almost all of the benchmark sectors that we cover are back to levels last seen in March/April 2021, with a selection of sectors – UK Prime RMBS seniors, UK BTL and NCF RMBS 2nd pays, Irish RMBS seniors, and Portuguese RMBS seniors – having retraced back to levels last seen in early January 2021.” Indicative spreads for those sectors currently stand at 35bp, 152bp, 156bp, 57bp and 67bp, respectively.

Meanwhile, the primary market continues to see extremely limited activity, with issuers still staying on the side-lines. There is just one visible deal in the pipeline – Shamrock Residential 2022-1.

Though late Friday afternoon did see some activity, with two pre-placed deals printing – Dutch Property Finance 2022-CMBS1 and UK non-conforming RMBS Stanlington No.2. Both saw their triple-As price below par.

For more on all of the above primary deals, see SCI’s Euro ABS/MBS Deal Tracker.

Mark Pelham

ABS

POS ABS prepped

Barclays backstops UK debut

Barclays is in the market with the UK’s first point-of-sale (POS) loan ABS. Dubbed Pavillion Point of Sale 2021-1A, the transaction is backed by a £491.57m revolving pool comprising 894,320 unsecured loans granted to private individuals domiciled in the UK and serviced by Clydesdale Financial Services (CFS).

The seller is Isle of Wight Home Loans, which acquired the portfolio from CFS. All of the exposures are interest-free and will be sold to the issuer at a 5% discount rate, thereby synthetically generating asset yield.

The POS loans were originated via five retailers: Apple (accounting for 52.4% of the pool), British Gas (8.3%), DFS (20.8%), Next (6.5%) and Wren Kitchens (12%). The exposures are relatively seasoned at 13.1 months, on an average original term of 34 months.

The majority of the loans were originated in 2020 (46.6%) and 2021 (44.4%). The pool is geographically diversified across the UK, with concentrations in the Greater London (19.4%), South East (18.9%) and North West (13.7%) regions.

The transaction is provisionally rated by Fitch and DBRS Morningstar (see SCI’s Euro ABS/MBS Deal Tracker). The class A notes are listed on an ‘offered’ basis, while the remainder of the capital stack is listed as ‘call desk’. Nevertheless, a backstop is provided by Barclays, which will – together with one of its affiliates – subscribe to between 5% and 100% of the class As and between 5% and 20% of the mezzanine class B to class X notes.

The 1.45-year triple-A rated class As feature a coupon of SONIA plus 100bp and the expected cash price is already indicated at par, while the class B to class X notes are expected to price at a discount. Pricing is targeted for as early as Friday.

DBRS Morningstar points out that the UK FCA issued a section 166 notice to CFS in 2020 and required it to appoint a skilled person to undertake a review of its lending portfolio to establish whether there was any evidence of any actual and/or potential customer harm caused by poor broker practices and inadequate affordability processes, or weaknesses in the current broker oversight framework and affordability assessment. However, the rating agency notes that the potential exposure appears to be limited, as the unaudited analysis of the portfolio shows that less than 1% of receivables have potential indicators of customer distress with another 2% still under assessment. Furthermore, Barclays has agreed to indemnify the issuer for any purchased receivables that are affected by remediation matters, under the terms of the purchase.

Corinne Smith

Structured Finance

SCI Start the Week - 7 March

A review of SCI's latest content

IWD: Breaking the bias in structured finance
International Women’s Day, on 8 March, is an opportunity both to celebrate women across the globe from all walks of life and to strive further for their equality. This year, the IWD campaign is #BreakTheBias and we at SCI have compiled a series of interviews and insights – that will be published today through Wednesday – with the aim of helping to do just that within the securitisation industry.

Efforts to embrace diversity may sadly still only be window-dressing in the case of the structured credit market. As Reed Smith EME managing partner and structured finance head Tamara Box argues in the first article in our IWD series, the problem is not a lack of qualification; it is a lack of recognition.

In the second of our IWD pieces, DBRS Morningstar structured finance research svp Stephanie Mah underlines how diversity can boost a business’ bottom line. “Racial and gender diversity - especially across a multitude of cultures - ushers in different and more comprehensive skills, viewpoints and strengths,” she explains. Pay equity is paramount in retaining this diversity.

For the third article in the series, SCI deputy editor Angela Sharda sat down with Alston & Bird’s structured finance practice leaders to discuss how recruitment and retention policies, as well as mentoring programmes, can cultivate diverse talent and provide meaningful opportunities. The practice is notable in the industry for being led by female partners and for women making up the majority of the overall team.

In the final article of SCI’s series celebrating International Women’s Day, Allen & Overy securitisation partner Lucy Oddy cites a winning combination of supportive male colleagues and senior female role models – rather than luck – as the reason she works in a team full of female talent. Her message to junior women working their way up the ladder is a quote from fictional teddy bear Winnie the Pooh: “You are braver than you believe, stronger than you feel and smarter than you think.”

Across this series of articles, we look at the challenges women continue to face in the workplace, their journey into leadership roles, how they tackle issues around diversity and their advice to aspiring women leaders within the securitisation market. We hope that you enjoy reading the series and that you will join us in celebrating the inspirational, motivated and dedicated women working across the structured finance sector.

Last week's news and analysis
Capital trouble
The final ECRF rule fails to remove impediments
Feedback loop
CRE CLO confluence to continue?
Ramp up continues
BMO completes leveraged loan SRT
Team building
Kuvare Insurance Services answers SCI's questions
Transitioning to green
Call for EU GBS to be extended to securitisation
War time blues
International turmoil adds to CRT distress
Which probability is the probability of default?
Two ways of conceptualising probability of default

For all of last week’s stories including ‘Market moves’ and ‘Risk transfer round-up’ click here.

SCI CLO Markets
CLO Markets is SCI’s new service providing deal-focused information on the global primary and secondary CLO markets. It offers intra-day updates and searchable deal databases alongside BWIC pricing and commentary. Please email Jamie Harper at SCI for more information or to set up a free trial here.

Recent Premium research to download
CLO Control Equity - March 2022
CLO equity is back in vogue and is attracting attention for all the right reasons. As this Premium Content article suggests, for suitably prepared investors, taking a majority position can increase the benefits still further.
Stablecoin and securitisation - February 2022
Appropriate regulation of digital payment could pave the way for the issuance of securitisations in stablecoins. However, this Premium Content article argues that further standardisation across the blockchain ecosystem is needed for the technology to reach a critical mass.
US auto CLNs - February 2022
Santander’s recent auto CRT echoed those previously issued by JPMorgan Chase. This Premium Content article examines the similarities and differences between the transactions.
Irish & UK Banking Evolution - October 2021
Consolidation among lenders and the proliferation of fintechs is driving change in the Irish and UK banking sectors. This Premium Content article investigates the impact on the jurisdictions’ RMBS markets.

SCI Events calendar: 2022

SCI’s 1st Annual ESG Securitisation Seminar
16 March 2022, London

SCI’s 6th Annual Risk Transfer & Synthetics Seminar
27 April 2022, New York

SCI’s 3rd Annual Middle Market CLO Seminar
June 2022, New York

SCI’s 4th Annual NPL Securitisation Seminar
September 2022, Milan

SCI’s 8th Annual Capital Relief Trades Seminar
October 2022, London

Structured Finance

ESG seminar line-up finalised

Sustainable securitisation on the agenda

SCI’s inaugural ESG Securitisation Seminar is taking place in-person on 16 March at the London offices of Clifford Chance. The event will examine the role that securitisation can play in sustainable finance and the challenges that need to be overcome to achieve its potential.

The seminar begins with an overview of EU regulation and policies focused on ESG objectives in connection with securitisation, followed by a panel exploring disclosure and due diligence issues. Next is a panel discussing ESG issuance frameworks, while another looks at data and infrastructure issues.

Finally, a panel on supply and demand examines the use-of-proceeds approach and transition securitisations. The event also includes a fireside chat featuring Mira Lamriben, policy expert at the EBA.

SCI’s 1st Annual ESG Securitisation Seminar is sponsored by Allen & Overy, Angel Oak Capital Advisors, EIF, Linklaters, Munich Re, Newmarket, Santander, Simmons & Simmons and Societe Generale. Speakers also include representatives from BNP Paribas, Cairn Capital, Climate Action Women, Climate Bonds Initiative, European Mortgage Federation, Federated Hermes, FIS, IACPM, Investec, Kensington Mortgages, PGGM, Prime Collateralised Securities, TCW and TwentyFour Asset Management.

For more information on the event or to register, click here.

CMBS

Ratings furore

Industry pushback throws into doubt S&P CMBS ratings action

S&P this week agreed to push back the RFC period for its proposed changes to ratings for securitized securities held by insurers from March 18 to April 29.

This is the second extension to the time allowed for the RFC, which was initially set to end on February 18 when the mooted adjustments were first announced on early December 2021.

In a conference call on Tuesday to discuss the plans, S&P also indicated that it is open to modifying the proposal, and several onlookers now think it is unlikely that it will proceed as originally intended.

“I am hopeful that there is now going to be negotiation between the interested parties, and whatever the ultimate resolution it is more aligned to the actual risk inherent in the securities,” says Alan Todd, head of CMBS strategy at Bank of America in New York.

Other market sources add that there has been considerable industry pushback to the proposals, and there is also talk members of Congress vowing to hold Washington hearings.

S&P has declined to comment.

The rationale for the changes is that the agency’s share of some sections of the structured finance ratings market has slipped in the last several years. Rather than trust the capital adequacy evaluations undertaken by other agencies, it wishes to lower the ratings of securitized products owned by insurers that it has not rated.

So insurers will have to add more capital to support its holdings of structured debt or sell securities if they do not want to suffer negative ratings actions, and as the S&P footprint is particularly small in the CMBS market it is here that the impact will be felt most heavily.

In a note this week, Morgan Stanley estimates that around $234bn of CMBS securities could be affected. It adds that since the financial crisis of 2008/2009 S&P has rated 1,715 total bonds out of the 6,130 bonds issued, or a total of 27.4% of the total original notional balance of conduit securities.

When the proposals were first made three months ago it was estimated that 10% of US insurance firms will be affected.

Specifically, S&P proposes that for structured finance securities it does not rate but which are rated by both Moody’s and Fitch, it will haircut the lower of the two ratings by two notches. For securities which are rated either Moody’s or Fitch but not both it will haircut the rating by three notches.

For bonds not rated by either and only rated by other agencies like DBRS or KBRA, a rating of CCC will be imposed.

“It hits CMBS harder within structured finance because S&P’s market share has been declining. The impact of the notching becomes more apparent and more prevalent in CMBS,” says Todd.

Rather than face those consequences or up capital, insurers could sell existing assets. The scale of the selling will depend on the composition of the CMBS book at any insurer and whether or not they were rated by S&P.

However, going forward, this could also directly affect the attractiveness of new bonds to buyers that are not rated by S&P.

The proposals have excited considerable market disquiet. “This means that you take a AAA bond that was rated by Kroll and now you’re rating it as junk. This is the sticking point for me,” says a CMBS source.

Investors have sounded the alarm bells and their concerns were voiced during this week’s conference call.  

“The impact doesn’t feel commensurate with the increased uncertainty S&P might have because they didn’t rate it or because they feel the rating doesn’t reflect the level of risk in the bond,” says Todd.

Simon Boughey

Regulation

Legacy Libor

Senate passes Libor act, but worries about adequacy of SOFR remain

The US Senate yesterday passed the Adjustable Interest Rate (LIBOR) Act into law, but market sources say the replacement of Libor by SOFR in legacy contracts will precipitate legal action.

Problems are predicted as there is currently a wide and growing disparity between Libor and SOFR settings.

“There’s going to be a lot of law suits. People that were expecting to get a bump in interest aren’t going to get any,” says an experienced structured finance market source.

One month Libor is today just below 40bp. This is 10bp wider than a week ago and 30bp wider than a month ago. The Russian invasion of the Ukraine has raised risk in all markets, and Libor reflects these concerns.

During the same period, 30-day average SOFR has been rooted to 5bp, according to the Federal Reserve Bank of New York.

Clearly, for investors would have enjoyed better returns if the reset date on their Libor-based bonds had occurred in the last few days. 

The Libor Act requires SOFR, plus a set spread depending on the Libor term, to be used instead of Libor for all contracts from the middle of 2023. Yet there are few clues about how this spread will be calculated.

The legislation applies to those contracts which have no fall-back provisions or provide an alternative rate. This has been a sticking point for the change to SOFR as many contracts in the structured finance world have no fall-back language.

Yet there continues to be dissension about whether SOFR is an adequate replacement index. “SOFR is the dumbest index I’ve ever seen. It’s just a stupid index, badly put together,” says another source.

The act does, however, provide safe harbour provisions to protect parties from liability as a result of lawsuits occasioned by the move away from Libor.

Libor is used extensively in the structured credit market, and what happens when Libor disappears into the sunset has been a source of anxiety for some months. While the legislation creates certainty and has been welcomed by many, questions remain.

Issuers of CLOs face particularly pressing problems, as the great majority of loans which provide the collateral are indexed against Libor. Nonetheless, there has been an increasing number of CLOs referencing SOFR priced this year, and more are expected.

The Federal Reserve must now issue regulations to administer the law within the next 180 days. More details on the setting and calculation of the spread might be forthcoming on this occasion.

Simon Boughey

Structured Finance

'Show, don't just tell...'

Celebrating IWD: on why women need more leadership role models

That diversity increases innovation and competitiveness for business is well-understood, but efforts to embrace it may still only be window-dressing in the case of the securitisation market. In the first article in our series celebrating International Women’s Day, Tamara Box, managing partner EME and head of structured finance at Reed Smith, outlines her views on why women need more role models in leadership positions. She also provides three tips for women who are seeking to move into leadership roles.

Q: How would you describe the picture for women in top-level roles within the securitisation market?
A:  The financial services sector has not been on the leading edge of gender balance, but it is making an attempt now to create teams that look more like the population, by including more women, people of colour and individuals who identify as LGBTQ. Clients have demanded this diversity.

However, many of those same clients have remarked that this may be only window-dressing, as the leadership roles are rarely held by diverse professionals. There have been strides made in increasing the numbers of women on boards and in C-Suite positions, but the board roles are almost always non-executive, and the C-Suite positions are generally HR or marketing - areas that have stereotypically been seen as ‘women’s’ jobs. 

In 2019, women earned 48% of the MBA degrees awarded in the US, according to the National Center for Education Statistics. Women have been earning more university degrees than men for 40 years; yet women are still severely underrepresented in leadership roles, including a paltry 8% of Fortune 500 ceo slots held by women. The problem is not a lack of qualification; it is a lack of recognition.

Q: Why is there a lack of women in top-level positions in this sector?
A: There is a history of ultra-masculine culture in the sector; one that rewards arrogance and braggadocio - behaviours that are counter-productive for women. In addition, the myth that ‘busy-ness equals importance’ means that men often boast about being so overwhelmed that they have to pull an all-nighter.

I love what I do, but if I found myself needing to pull an all-nighter, that would mean that I didn’t allocate my time or my team very well. It should mean the same thing for men.

Yet the old biases persist - the assumption, for example, that a woman who has a family cannot be committed to her job.  What, men don’t have families, too? 

The problem becomes acute when women realise that there are few leadership role models that look like them, making them more likely to walk away than to try to fight the system. Their retreat shrinks the pipeline even further and makes it more difficult for other women to envision a rewarding career for themselves in this sector.

Q: Have you seen a change in terms of diversity within this sector over the years?
A: Diversity used to be defined only in terms of gender, but now we know that diversity of all kinds - ethnic diversity, LGBTQ, disability, neurodiversity and even social mobility - will increase innovation and competitiveness for business. Our clients across the globe have gone hunting for diverse talent, starting with entry-level positions straight from university and all the way up the ladder.

While this is may be a harbinger of things to come in leadership, the progress has been way too slow. How many years have we been working on gender balance and we are nowhere near the finish line on that one? How long is it going to take for us to balance our teams - and not to mention our leadership - in other areas?

Q: How can the structured finance space be made more attractive to women?
A: We need more role models – you can’t be what you can’t see. Clearly women have the talent, the skills, the education and the expertise to be in leadership positions; the industry just needs to recognise that and put them there. 

When I started Women in Structured Finance all those years ago, it was with the goal of getting women talking to each other. We all felt it was important for young women to have access to senior female leaders and be inspired to want to be a part of this industry. The culture of the ‘old boys’ network’ - including the bars and sports events - was not the one that would work for us, so we brought women together for events that were more relaxed and open; events that allowed us to get to know each other in a more authentic way. 

There weren’t many women’s organisations back then and certainly not in this sector, but today this sort of bonding and mentoring occurs more regularly. I’m encouraged by that, because women need to support each other if we are to make inroads in gender balance.

Q: Which changes would you like to see, in order for women to excel in the industry?
A: I can’t stress this enough: women need more role models in leadership. The women are out there; they are in your organisations, in your competitors’ organisations and in organisations in other industries. Put them in those key positions where they can have the most influence on your future - where you can actually benefit from the diverse ideas and innovations that they stimulate.

In leadership roles, they will also be a daily reminder to all the other women in your organisation that you do, in fact, respect their skills and abilities and that you do want women in leadership. Show; don’t say.

Quit talking about gender balance and diversity and take the necessary actions to make it happen. Role models are the roadmap for success.

Q: What is the future for women who aspire to lead within the structured finance space?
A: We work in an exciting industry; one that is constantly seeking to develop new products and grow into new markets. Diversity-fuelled innovation will accelerate this process and create more opportunities for women, if the current leadership is progressive enough to see that.

Reports indicate that as men with daughters are rising to the top jobs in finance and banking, their priorities and understanding of gender may be evolving, as a result of living with educated, capable women. It’s a tiny ray of light, but it is something.

I don’t mean to sound pessimistic; in fact, I’m very optimistic about the future of the industry and the role that women will play in it. It won’t happen overnight, but I still believe that women will someday be considered equal to their male co-workers.

But attitudes need to change - not only in men, but in women too. We have to quit apologising for not being like men and tout the effectiveness of our own techniques and methodologies.

According to a McKinsey study, women apply five of the nine most effective leadership behaviours more frequently than men and thus contribute to stronger organisational performance. Why do too many of us think that men are better at leadership, when in fact women are?

Q: What advice would you give to women who want to move into leadership roles?
A: Women have to be aware of the ‘double bind’: that a woman can be considered likable or capable, but not both. While that may seem self-defeating, there are some ways to work within this bias.

First, be yourself. Authenticity is a buzzword right now, but it is critically important for women to be women, with all the traits and attributes that are natural for them.

Trying to hide your feelings or change your behaviour to match that of men will only make people think you are a fraud when you are unmasked (and believe me, you will be). Fraud is not a desirable leadership trait.

Second, be direct about what you want and clear-eyed about what you have to do to get it. Try to expand your expertise and experience by taking lateral opportunities that may help you learn different areas of the business. Your goal is not to get stuck in one field where you are typecast as someone with only one skill.

Third, seek out a sponsor. Find someone with influence, who can mentor you and then speak up for you when appropriate.

Very few men rise to high-level positions without sponsorship; why should you think you don’t need this same kind of help? The sponsor can also help you overcome the negative effect of the double bind, as the assessment of a current leader may be considered more reliable than the limited experience your colleagues may have had with you. 

Angela Sharda

Structured Finance

Boosting the bottom line

Celebrating IWD: on the need for equal pay

Firms with diverse leadership are 21% more likely to outperform from a profitability perspective, according to findings in McKinsey & Company’s Diversity Series. In the second article in SCI’s series celebrating International Women’s Day, Stephanie Mah, svp, structured finance research at DBRS Morningstar, argues that pay equity is paramount in retaining female representation in the securitisation industry.

“In diversity there is beauty and there is strength,” said activist and poet, Maya Angelou. Beauty and strength, although uncommon adjectives to describe some industries, still apply to the business world.

What firm doesn’t want to enhance employee engagement and culture? Spur innovation? Improve its bottom line? While we have made strides in recent years, the structured finance industry needs to build on its proactive efforts to represent a more diverse workforce. It starts at the bottom.

We need to attract bright young women to the securitisation field and then cultivate them to be future leaders in our industry. The jumpStart Program, launched in 2021 by 100 Women in Finance, aims to take that first step. The virtual event brings together female college students and introduces them to the world of finance, with access to accomplished women in the field.

Similarly, the Structured Finance Association’s Women in Securitization (WiS) group has organised initiatives to introduce female college students to the world of securitisation and give them continued access to women leaders in our industry. WiS, which was established in 2014, goes beyond that first step and aims to foster professional development, retention and advancement of women in structured finance throughout all phases of their careers. It is critical for young women entering our field to see female leadership at the executive level - serving not only as role models, but also as tangible proof that there’s a potential seat for them down the road.

Only a few years out of college, I worked for The Public Securities Association (later known as The Bond Market Association), an international trade group for the bond market industry, where I had the privilege of working alongside Heather Ruth, the association’s president. She led the Association when all its committees, apart from one, were headed by male sell-side executives. It was inspiring to see her lead.

I have been very fortunate to work alongside other female executives and role models, including my previous stint reporting to Vickie Tillman, retired president of Morningstar Credit Ratings, and my current post under Claire Mezzanotte, head of global structured finance, at DBRS Morningstar.

I have been able to sharpen my own skills by observing their work and witnessing first-hand how they tackled difficult projects. The guidance and support of these three amazing women have profoundly influenced the trajectory of my career.

Mentorship and sponsorship are important throughout all levels in one’s professional career, including mine. Diversity matters, not only in increasing female representation within our industry but also in expanding opportunities for women from various cultures and ethnicities - including, among others, Asian Pacific women, Black women, Latina women and Native American women. Racial and gender diversity - especially across a multitude of cultures - ushers in different and more comprehensive skills, viewpoints and strengths.

To put it in terms that our industry is more akin to following, diversity can boost the bottom line. According to findings in McKinsey & Company’s Diversity Series, gender diversity success led to a 25% increased likelihood of outperformance, and firms with diverse leadership are 21% more likely to outperform from a profitability perspective. As investors and regulators alike place increasing importance on environmental, social and governance concerns, the momentum of diversity, equity and inclusion efforts across all industries will likely continue.

Recently put into effect, California’s regulation AB 979 requires a minimum of one minority director on corporate boards. The legislative mandate expands at the end of 2022, with the requirement of having a minimum of two to three minority directors at larger corporate boards. Moreover, the SEC is considering board diversity and disclosure rules, which would be in line with the United Nation’s Sustainable Development Goals for organisations to work toward empowering women and girls.

Challenges ahead are in the form of taking the next steps beyond diversity efforts, towards equality and inclusion. Pay equity is paramount in retaining female representation in our industry.

Equal pay and salary transparency efforts will help shed some light on budgeted salary bands and empower women to better know their worth. In addition, inclusion must also be an integral part of the equation.

Simply having increased representation of women in the securitisation industry is not enough, especially when representation stays at the junior level; accomplished and effective women need viable opportunities for advancement to senior management and executive levels, with heightened awareness, connections, empathy and mutual respect. Challenges may lie ahead, but so do beauty and strength.

Structured Finance

Paying it forward

Celebrating IWD: on empowering the next generation of women

Alston & Bird’s structured finance practice is notable in the industry for being led by female partners and for women making up the majority of the overall team. For the third article in our series celebrating International Women’s Day, these leaders sat down with SCI deputy editor Angela Sharda to discuss how recruitment and retention policies, as well as mentoring programmes, can cultivate diverse talent and provide meaningful opportunities.

AS: How does Alston & Bird stand out when it comes to diversity?
SC: Alston & Bird’s structured finance team is led by Tara, a female partner; 38% of partners on the team are women and 61% of our associates are women. Within our paralegal ranks, we have seven who are women.

Additionally, 10% of our team is LGBTQ+. You will find that our diversity and inclusion stats are well above average for big US law firms.

Alston & Bird gives us the freedom to hire and recruit who we want – and that trust and confidence continues to this day. For example, when I introduced Alston & Bird’s hiring committee to Katrina, they trusted my judgment that she would be fantastic. We were going to take her under our wing, and we were going to grow together – we made her partner and hired her team with her.

Alston & Bird also really supports us – it provides us with mentoring programmes, mentoring budgets, and the opportunity to build a great women’s initiative committee in each of our offices. We are heavily invested in true diversity of background, experience and perspective.

Personally, I focus on women and diverse candidates, which occasionally requires thinking outside the box for how we’re going to hire them. We can’t just go to the same schools and look at the same criteria and expect a different result.

In autumn of 2021, our team welcomed five new associates, including four women. For our incoming class in September 2022, again, we will welcome four new associates – including three women, two of whom are diverse. So, clearly it is at the forefront of our minds, and we keep pushing forward to make sure we keep hiring diverse and female candidates.

AS: Talk us through the challenges that you have encountered as you moved up the ranks to your current positions.
KL: Before joining Alston & Bird, I was counsel at another big law firm in New York. I did well and our team was successful by most metrics, but I always felt that I did not have the right support network to help me get to the next level career-wise. I came to know Shanell and Tara while I was on a secondment with a mutual investment bank client.

While at the investment bank, I oversaw the commercial real estate desk, and Shanell served as primary outside counsel for the group. I was on the phone with her almost every day. One evening, she invited me to an event that Alston & Bird’s New York Women’s Initiative was hosting in celebration of International Women’s Day.

I could see the innate confidence Shanell and Tara had professionally, but the thing that struck me the most was that this event was not only a way of promoting the women at the firm but was also a way of promoting their clients. They had a panel featuring women all across the financial sector talking about their experiences and challenges.

It was a true example of leadership in action. Seeing how they were promoting and helping women – not just within the firm but also within the financial industry – was inspiring.

That was the type of environment I wanted to be part of. After seeing that, it really didn’t take much more effort on their part to get me to move my practice over to Alston & Bird.

It has now been almost three years since I joined Alston & Bird and I have been able to build a successful MSR financing platform, where we have been involved in some of the mortgage industry’s most noteworthy and innovative servicing transfers and financings – all as a result of support from women in this group, like Shanell and Tara.

KT: I lateralled over to Alston & Bird at a very early stage in my career, maybe as a second- or third-year associate. I was working in a completely different practice group with two wonderful male partners. I would have stayed working for those two male partners, but a couple of years ago they made the decision to leave for another platform.

I was at a crossroads in my career, trying to think strategically about the kind of partnership I wanted to be involved with, and where would be the best place for me. Honestly, it was the hardest decision of my professional life, deciding whether or not to follow my mentors.

Ultimately, it came down to where I felt most comfortable and supported. Alston & Bird’s finance team was female-led and I felt so much more comfortable when joining this practice in this position at the firm – and that really is the reason I’m still here.

AS: How would you describe the current environment for women working in leadership roles within the structured finance industry?
SC: The Structured Finance Association’s (SFA) Women in Securitisation (WiS) initiative has done a wonderful job in this area. It’s definitely something that’s at the forefront of the structured finance industry because I think it’s important for those of us in leadership positions to make sure that we continue to hire diverse teams and work to mentor and retain talent at all experience levels.

TC: I’m what our firm calls ‘home grown’ because I’ve been at Alston & Bird my entire career. When I started my practice, the industry was generally male-dominated, and during the formative years of my practice I didn’t have any female mentors.

It has been rewarding to see the changes over the last 15 years within our practice and the industry at large, in terms of increased female representation, particularly in positions of leadership. I remember going to my first industry conference when I was a mid-level associate and absent from the experience was a formal network or initiative focused on bringing female participants together.

Fortunately, that has changed, in large part due to the efforts of the SFA WiS initiative – which has consistently scaled and evolved since its inception, with the investment and support of both male and female industry participants. The SFA WiS is focused on the development, advancement and retention of women in the structured finance industry. As a member of the WiS cabinet, I feel fortunate to be part of this evolution and important initiative and take this responsibility seriously.

AS: Is there enough support for women from diverse, BAME and LGBTQ+ communities to progress in the structured finance industry?
TC: Great question. Personally, I have been very fortunate to be supported by the firm and the practice group at large throughout my entire career. I know that the support and mentorship I have received is a privilege, and one I don’t take lightly.

We need to have more diverse attorneys like me across the board. I have a responsibility as a partner and leader of our structured finance team to continue paying it forward, both internally and externally from an industry perspective.

There’s a lot of work to be done, and it’s incumbent on all of us to start identifying incremental and tangible steps towards developing, cultivating and retaining diverse talent and providing meaningful opportunities. Mentorship is a critical first step.

SC: We have programmes with local New York City public high schools to bring in students who are interested in a legal career to do internships over their summers.

In the legal profession, I believe we need to start focusing on diverse students who want to go to law school. We have diverse students who want to work in the corporate area who may not realise that a law degree lays terrific groundwork for success there.

We need to start upstream as early as possible by going into our communities and educational systems to make sure we are supporting diverse, female and LGBTQ+ people early on in their career – whether or not they choose law – as part of our civic duty.

AS: Do women from diverse backgrounds need to work harder in order to progress within this field?
TC: As a first-generation American, working hard is part of my genetic make-up. I took ownership of my legal career on day one and strategically leveraged every opportunity or resource made available to me.

I started my career just before the financial crisis and, as a result, had to get comfortable with the uncomfortable very early on in my career. Based on this experience, I learned a lot of lessons, and it has played an invaluable role in shaping my career and practice.

AS: What else needs to be done to provide a supportive environment for women to excel in?
TC: We need to continue to pay serious attention to recruitment and retention, and that includes a focus on training and development and making a real investment of our time and resources. From a law firm perspective, we have to make a conscious effort to continually invest in our associates.

Throughout the year, I sit down with the junior and mid-level associates on the structured team and talk about career development and their path forward. As our team has grown, the investment of time increases.

But I know that without making that investment, we’re not going to have talented attorneys that want to stay long term come join our platform. I want to be able to credibly tell everyone I hire that we are able to support them on multiple levels, and that includes creating and finding opportunities for their advancement and success.

Personally, I was very fortunate that the male partner I grew with saw the value in bringing me to industry conferences at a very early point in my career. I pay it forward with the members of my team now. This is another worthwhile investment, because being exposed to the structured finance industry at large is the basis of understanding that we are part of a broader ecosystem, and this perspective is critical in order to be effective.

In terms of the environment that my fellow partners and I try to foster, we are open, communicative and transparent. We solicit and request feedback, and pivot and adapt to team needs. As a leader, it’s important to be flexible and be proactive (not reactive), especially in the current environment.

KL: I think another important factor in seeing women continue to excel is to see more women in positions of leadership. The power of being a role model cannot be overlooked, and women in leadership positions are able to use the opportunity to empower the next generation of women.

AS: Is there a retention and recruitment crisis for women in leadership roles?
SC: I’ve only worked for women and pretty much just hire women, but I also have some wonderful men that work for me. I feel like we create an environment where they also feel supported.

I hope I have created a special environment, where all people feel included, and that there is a focus on those who may be underrepresented. It is unfortunately the exception and not the rule.

Sometimes when I go to conferences with women or I meet people like Katrina – who were from another firm – or Kristen, when she was joining the finance group from another Alston & Bird team, I hear about different experiences. It reminds me how much work we still have to do as an industry.

I am seeing more and more women come into structured finance. I make a real effort to reach out to women in the industry, even women at other firms, and meet with them when I’m travelling to other cities. Or when my team is attending conferences, I’ll try to put together informal get-togethers, where we can all get to know each other better.

When I pull back and think about capital markets more generally, I’d like to see more growth in the investment banking industry for women, especially in management positions.

We all have choices in shaping our professional careers. I choose to be open and always willing to learn and adapt, and do everything I can to recruit, promote and retain a talented, diverse team.

AS: What advice would you give women who want to progress into leadership positions?
KT: I am very much in the initial building stage of my career and trying to figure out my path, and it certainly is challenging at times. Looking back on my journey as a lawyer, from being an associate to a partner, I would say first and foremost don’t be afraid to ask for help. Even in a leadership role, you don’t necessarily know everything and that’s OK.

Also, look to those who have come before you – they are excellent resources. And, while this is difficult, don’t be afraid to fail. Building a professional career has a steep learning curve, and I’m figuring it out as I go.

One thing I’m working on is building a team that can support me and, with that, is leadership. In leading a team, I absolutely believe in ongoing and open communication, so I regularly ask my associates what they need from me. What training is most helpful? What support do you need and how can I make your life easier?

Finally, I think being flexible and confident is important. Over the years, I’ve learned to ask a lot of questions and figure things out as I go, while also taking every opportunity that comes my way. Having confidence in my abilities and what I bring to the table has been key for me.

TC: I live by asking for forgiveness, not permission. My practice has grown by taking chances and taking risks. As a result, I’ve only gotten my hand slapped a few times, but each stretch opportunity and risk that I have taken has had an immeasurable positive impact on my career.

At Alston & Bird, we’ve been very fortunate to have a lot of great female role models. Shanell, for example, has been a great mentor to me and many, many other women here. I live by example; setting others up for success and being an advocate.

Biographies
Tara Eliza Castillo is chair of the structured and warehouse finance team and a partner in Alston & Bird’s finance group. She focuses her practice on warehouse finance, structured finance, securitisations and other asset-backed transactions.

Shanell Cramer is a partner and co-chair of Alston & Bird’s finance group. She represents investment banks and other financial institutions in a variety of mortgage banking and financing transactions.

Katrina Llanes represents lenders, underwriters, investors, borrowers, sponsors and issuers in a variety of corporate finance transactions. She is a partner and an active leader at Alston & Bird, serving as both a practice group diversity partner and co-chair of the firm’s New York chapter of the Women’s Initiative.

Kristen Truver is a partner in the finance group, experienced in structured finance, including all aspects of commercial and residential mortgage-backed securitisations. She serves as the national co-chair for Alston & Bird’s sustainability committee, where she leads and evaluates the firm’s environmental initiatives.

Structured Finance

'We all have a part to play'

Celebrating IWD: on attracting more women to leadership positions

Lucy Oddy, securitisation partner at Allen & Overy, is perceived as lucky to work in a team full of female talent. But, in the final article of our series celebrating International Women’s Day, she puts it down to a winning combination of supportive male colleagues and senior female role models.

I was describing my team to a candidate the other day and they said that I was “lucky”. I was explaining how diverse the team is and that I am surrounded by successful females at all levels.

In fact, because of this, I am often taken aback at the lack of senior female talent in leadership positions in the securitisation sector in general. Even in this day and age, when diversity is high on everyone’s agenda, it is not uncommon for me to attend a meeting or these days a Zoom call and for the other senior attendees to be men or indeed sometimes all of the other attendees are men.

For my own part, the men I have worked with during my career - both partners I have worked with in my own firm, those I have worked across from at other firms and my clients - have played a significant part in mentoring me and helping to give me the confidence and ambition to achieve my goals. Men have an important part to play in supporting women they work with or mentor and I don’t think that I would be where I am today without that support. When I look at my own team at A&O, the men we work with are incredibly supportive of the women in the team at all levels.

I am proud to say that in the A&O securitisation team, we have three very successful female partners, who are market leaders in their fields and over half of our associates are women. This has been a consistent trend in our team for at least the last 10 years.

Our team is a heavily transactional-based practice - working on difficult deals with challenging clients and sometimes working long hours. Notwithstanding this - which I have heard people say is something that puts females off securitisation and other jobs in finance - we have a team full of female talent.

Is this really all down to luck? I think not. This combination of supportive men and having female role models at a senior level has, in my view, engendered an environment where women feel confident to speak out and put themselves forward and believe that they can achieve their goals.

If women see other women in senior positions, who are successful at what they do, enjoy their jobs and are respected by their male colleagues and clients, that can give them something to aspire to. That aspiration or ambition to achieve, combined with talent and support, is a winning combination.

My message to any junior women working their way up the ladder is perhaps best expressed by one of my heroes, Winnie the Pooh: “You are braver than you believe, stronger than you feel and smarter than you think…”. Remember that.

Structured Finance

Growing presence

Mia Drennan, president, founder and co-chair of GLAS, answers SCI's questions

Q: What is your strategic vision for GLAS and its continued expansion and growth in the US?
A: GLAS was founded in 2011 and we expanded into the US in 2016. Once we secured the necessary regulatory licenses and approvals to operate in the US, we began serving clients on a cross-border basis across the UK, Europe, Australia and the US markets.

We see a massive market opportunity in the US and our clients have expressed that they value our growing presence there to better serve them on global transactions. Our strategic vision for the coming months is to continue to grow our business in the US and globally, in order to provide the best client service and be influential debt servicing players in growing markets.

Q: What makes GLAS a good fit for the US market?
A: Since entering the US market in 2016, GLAS has played a critical role on a number of high-profile transactions, including the JCPenney and AMC Entertainment Holdings restructurings in 2020. As travel restrictions lift and our global team has the ability to collaborate in-person once again, we really want to seize the opportunity to accelerate growth.

Our clients in the US are keen to tap us for our experience on complex transactions because they know we provide bespoke solutions and unmatched service. During the pandemic, many traditional agent players and bank trustees in the US have exited the market, frustrating a lot of clients. The deal parties we work with need to be able to count on somebody, which is where GLAS comes in.

What is most important to our clients today is that we have shown that we are not in the business of shutting our shop - especially when they need us most. Instead, we have grown our business during the pandemic, developed new technologies and continued to provide the commercial service that we are known for.

Q: What are the primary objectives for the US business?
A: We are aiming to expand our platform, grow our client base and branch out into different services and offerings in line with our clients’ needs. Alongside this development, we’re also planning to bring on the best in the business to build a deeper bench to service clients.

Many in this business are anticipating a wave of bankruptcy at some point this year and that will be a key driver for our business. GLAS’s legacy at its founding was to act as an administration agent on restructuring transactions - so this is really our bread and butter. It is important that we are fully ready to take on all the new restructuring activity in the US that we are already used to doing as a company on a global scale.

Q: Are there different drivers for the business in the US compared to the European market?
A: We’re continuing to observe consolidation in the marketplace for debt service providers, especially as some of the traditional providers are taking a step back from offering some types of services. GLAS is poised to step in on these situations and take over for incumbent agents, getting up to speed quickly and providing value immediately.

The latest additions to our US team, Hugh McKee and Tino Mehlmann, have recently joined from Greensill to further strengthen our offering (SCI 4 February). These and our other recent hires exemplify GLAS’s commitment to delivering seamless support to US clients now and for years to come.

Q: How does GLAS differentiate itself from other trustees?
A: First, we are a commercially-focused entity - we always put our clients first, no matter the situation. We are making deal execution easy for our clients, and we have a deep understanding of risk in transactions and how our clients can avoid pitfalls.

For us, debt servicing is our core business. This is unlike other trustees, for which these services are just a small part of a larger offering or a bigger banking service. We work really hard to be innovative with how we can help clients achieve their financial aims in transactions, even with the really difficult, complex and often hairy situations.

Lastly, our technology is a huge differentiator that allows our clients to track information on their deals in real time. We are making the process easy for deal parties by providing a portal to house documents, complete steps in the transaction and stay up-to-date with the information they need, no matter the time of day.

Q: How does GLAS hope to meet the challenges that face the securitisation market at the moment?
A: The continual ability to execute well and continue to provide efficient servicing, reporting and transparency on situations is key. Our highly experienced team is prepared to deal with the amount of volume that is passing through the market at the moment.

Q: What are your expectations for the market in 2022?
A: For now, there still continues to be a huge amount of money knocking around. People are still investing heavily into businesses across the globe and providing them with liquidity.

The anticipation of rising inflation is at some point going to cause a bit of a stalling and will impact people’s borrowing. Given these market conditions, we can assume that there will potentially be more bankruptcy and restructuring activity towards the end of next year, but at the moment things are very much 2007 rather than 2008.

Q: Finally, how has the Libor transition affected your business?
A: Internally at GLAS, we set up a Libor transition academy at the start of last year to ensure our team was prepared for the new normal. We have a dedicated team that has been working hard, proactively going out to all the clients, deal parties and law firms to talk about how we are approaching Libor transition. We have been working with people in a collaborative manner and being proactive with the creditors that are involved in our deals on this, so we can actually execute change, and we will be doing the same in the US this year.

Claudia Lewis

Structured Finance

MV Credit plans to open new office

Sector developments and company hires

Natixis Investment Managers affiliate, MV Credit, is set to open a new Paris office under the leadership of Arnaud Heck. The new entity will integrate Ostrum Asset Management’s former private debt team to establish a new team of 16 at MV Credit France. Heck will serve as md and head of MV credit France, and under his leadership the new entity will work to continue the growth and development of innovative solutions for clients at MV credit, aligned with the priorities of the greater Natixis IM affiliate network. MV Credit France will manage and develop the CLO and corporate debt business formerly operated within Ostrum AM, the transfer of which is expected to complete by the end of the first quarter of 2022.

In other news…

North America

Ares has named Shelly Cleary as partner and president of Ivy Hill Asset Management. As head of Ivy Hill, she will lead the firm’s team of investment professionals focused on investing in and managing middle market senior secured loans through structured investment vehicles and managed accounts. Cleary has been with Ivy Hill for 14 years, having previously been md at the firm. Prior to Ivy Hill, she worked at CIT and GE Commercial Finance.

Orchard Global Asset Management has announced the hire of David Burke, who will be joining the firm in the newly established position of global head of distribution and investor relations. With close to 30 years of financial services sales and marketing experience, the firm hopes Burke will enhance existing client relationships and strategic growth. Burke brings his expertise to Orchard from MKP Capital Management, where he served as partner and chief client officer. In the new role, Burke will be responsible for the firm’s sales, consultant relations and investor relations services, and will take a seat on Orchard’s executive committee. He will also take control of managing communications and public affairs, reporting to ceo Paul Horvath.

Structured Finance

Carlyle tops rankings on CLO acquisition

Sector developments and company hires

Carlyle is set to acquire from CBAM Partners a portfolio of assets using a combination of US$615m in cash from Carlyle’s balance sheet and approximately 4.2 million newly issued common shares. CBAM’s US$15bn in assets under management - the majority of which are in CLO funds - will be integrated into Carlyle’s global credit platform. The transaction will increase Carlyle’s CLO AUM to approximately US$48bn, making it the world’s largest CLO manager.

Carlyle is also acquiring certain other CBAM assets across private credit that fit strategically into its global credit platform. The transaction will have an immediate and accretive impact to fee related earnings and distributable earnings per common share. This acquisition is expected to close in 1H22 and is conditioned upon the satisfaction of certain customary closing conditions.

In other news…

EMEA
Ardian has launched a new real estate debt business as it works to strengthen its operations in Europe. Arnaud Chaléac will lead the new business as head of Ardian Real Assets Debt, having been with the firm for 14 years building expertise in structured finance, and serving as co-head of group finance.

Chaléac will develop the new platform with assistance from md Sandrine Amsili, who brings more than 17 years of real estate debt expertise, including helping establish SCOR Investment Partners’ platform in the role of director. The new business will seek finance for European real estate projects alongside banks and will focus on senior debt.

Lev loan cap warning
The European Leveraged Finance Association (ELFA) has published a report warning against the use of voting cap provisions, following the first instance of aggressive voting cap language appearing in a European leveraged loan, as part of a Dutch chemical distributor’s recent buyout financing. Sabrina Fox, ceo, ELFA, comments: “Voting cap provisions severely undermine the notion of equal contractual rights and pro-rata principles for creditors. Such manoeuvres undermine the powers creditors are entitled to by virtue of their superior position within a borrower’s capital structure.”

She continues: “It is ELFA’s view that any increase in the prevalence of voting cap provisions will serve to lessen the appeal of investing in European leveraged credit markets, while lowering the valuations of distressed credit in secondary markets. This divide-and-conquer treatment of creditors seems even more egregious when factoring in the presence of additional clauses that exclude ‘net short lenders’ when calculating consent thresholds. Our aim is to make investors aware of the risks inherent in these provisions, so they can consider its inclusion in future deals.”

North America
Dechert has expanded its global finance practice with the hire of new partner Edward ‘Jay’ Southgate. With extensive experience in capital markets, Southgate joins the firm in New York from Morgan, Lewis and Bockius, and will serve as an asset finance and securitisation partner.