By: Michael Furrow and Shannon Clark , Fitzpatrick, Cella, Harper & Scinto ...
FEDERAL COURT FAST TRACKS REVIEW OF RULING BLOCKING IMPLEMENTATION OF OVERTIME REGULATIONS
THE FIFTH CIRCUIT COURT OF APPEALS ISSUED A BRIEF order December 8 granting expedited review of a November 22...
HHS AGENCY PROPOSES RULE TO STABILIZE INSURANCE MARKETPLACE
THE CENTERS FOR MEDICARE & MEDICAID SERVICES (CMS) issued a proposed rule aimed at stabilizing individual and small group health insurance...
By: Eric E. Bensen.
The Defend Trade Secrets Act (DTSA) 1 creates for the first time a federal private cause of action for trade secret misappropriation. 2 Prior to the DTSA’s enactment, private...
AMENDMENTS TO NEWLY PASSED CALIFORNIA CONSUMER PRIVACY ACT SIGNED INTO LAW
By: Lexis Practice Advisor Attorney Team
GOVERNOR EDMUND G. BROWN SIGNED A BILL AMENDING the California Consumer Privacy Act...
By: Jordan Yaret, Mikhel Schecter, and Bryant Mendel, Paul, Weiss, Rifkind, Wharton & Garrison LLP
STRONG ECONOMIC GROWTH AND HISTORICALLY LOW interest rates boosted U.S. structured finance issuance to $510 billion in 2017, a 37% increase over 2016 volume. This growth occurred across a wide range of asset classes. Up and down the credit curve, spreads (i.e., the difference between what the issuer receives from the underwriter and what the underwriter receives upon resale) on asset-backed securities (ABS) were stable or grew tighter in both developed and developing markets as demand far outpaced supply. Investors continued their hunt for yield further down the capital stack as well and into the more esoteric corners of the market.
The biggest driver in 2017 was the boom in the collateralized loan obligation (CLO) market. New CLO issuances were the second highest year on record, reaching $118 billion in the United States, up 64% from the prior year. A record number of existing CLOs were refinanced or reset, which in combination with new CLO issuances resulted in total issuances of over $250 billion in 2017. Some industry commentators pointed to the recently effective risk retention requirements as part of the driving force behind such growth; more than 50% of new CLOs complied with the risk retention requirements by retaining an eligible horizontal residual interest in the issuing entity in an amount equal to at least 5% of the fair value of all ABS interest issued as part of the securitization transaction, thereby resulting in less availability for third-party investors.
Another 2017 highlight was the non-traditional ABS sector or so-called esoteric ABS market, which comprises assets other than the usual sources for ABS financing such as auto-related, credit card, student loan, or equipment assets. Overall, the esoteric ABS market was up approximately 41% year-overyear, with issuances rising to over $50 billion. Consumer loan, whole-business, aircraft lease, single-family rental, and mobile device payment ABS led in this market, representing 61% of such issuance in 2017.
To read the full practice note in Lexis Practice Advisor, follow this link.
Jordan E. Yarett is a partner in the Corporate Department at Paul, Weiss, Rifkind, Wharton & Garrison LLP and is head of the firm’s Securitization Practice Group. Mr. Yarett has over 25 years of experience as a financing lawyer focusing on structured finance and securitization transactions. He has handled both innovative structured finance deals involving unusual asset classes as well as securitizations and bond financings involving a wide range of more traditional assets. Mikhel Schecter and Bryant J. Mendel are associates in the Corporate Department and members of the Finance Group at Paul, Weiss, Rifkind, Wharton & Garrison LLP. They focus on representing private equity funds and their portfolio companies in a variety of corporate finance transactions, including leveraged buyouts, debt restructurings, distressed debt purchases, and portfolio company financings.
To learn more about asset-backed securities (ABS) and other securitization transactions, see
RESEARCH PATH: Capital Markets & Corporate Governance > Structured Finance and Securitization > Securitization > Practice Notes
For details on the methods that are available to enhance the credit of securitized assets, see
> CREDIT ENHANCEMENT IN SECURITIZATIONS
For an explanation of the primary types of structured securities issued by aircraft leasing companies, see
> AVIATION INDUSTRY PRACTICE GUIDE
RESEARCH PATH: Capital Markets & Corporate Governance > Industry Practice Guides > Aviation & Aerospace > Practice Notes
For a discussion on ABS for commercial paper financing, see
> ASSET-BACKED COMMERCIAL PAPER FACILITIES
For guidance on shelf registration for offerings of investment grade ABS and the application of Regulations AB and AB II, see
> LEGAL FRAMEWORK OF SECURITIZATION TRANSACTIONS
For a review of the roles that the key parties play in packaging, servicing, selling, and administrating ABS, see
> PARTIES AND DOCUMENTS IN SECURITIZATION TRANSACTIONS
For a description of the various items that are prepared in anticipation of the closing of a securitization transaction, see
> CLOSINGS IN SECURITIZATION TRANSACTIONS
For information on the legal opinions that are commonly required to be delivered by counsel in most securitization transactions, see
> LEGAL OPINIONS IN SECURITIZATIONS
For an overview of the major provisions of the Dodd-Frank Act, see
> DODD-FRANK WALL STREET REFORM AND CONSUMER PROTECTION ACT KEY PROVISIONS
RESEARCH PATH: Capital Markets & Corporate Governance > Corporate Governance and Compliance Requirements for Public Companies > Corporate Governance > Practice Notes