Structured Finance In Brief

Updates and Analysis on current structured finance issues, upcoming events and activities of Reed Smith's structured finance group

Read time: 4 minutes 50 seconds As well as ringing in the start of a hopefully brighter and better 2021, January also saw Indian banks testing the waters of LIBOR transition, with State Bank of India and ICICI Bank involved in their first alternative risk free rate transactions. Utilising the US dollar Secured Overnight Financing Rate (SOFR), these deals signal that the Indian market is at last receptive to the prospect of LIBOR transition, having…
Read time: 3 minutes The term “NPL Securitisation” has been bandied around a lot recently, and for good reason given the hugely important role it can play in the non-performing loan (NPL) arena. As banks begin to contemplate life after COVID, they will be acutely aware of the need to neutralise NPLs sooner rather than later. These stockpiles will not only constitute NPLs emanating from the global financial crisis but will also comprise a new…
Read time: 4 minutes As terms like social distancing and the second wave have permeated our lives throughout the 2020 Covid-19 pandemic, people have been forced to adapt to the new normal. It hasn’t been all bad, and an unanticipated quirk of lockdown has been the huge uptake in hobbies and personal interests as people adopt new methods of entertainment. With podcasts growing in popularity before the pandemic, they have now entered a golden age,…
Read time: 4 minutes 25 seconds NPL Securitisation is a term that is very much en-vogue at the present time. Although its rise to prominence can be attributed to a number of factors, in recent weeks the chief contributor has been the European legislature steps towards amending the Securitisation Regulation and the Capital Requirements Regulation. These steps are being taken to ensure that securitisation is better placed to facilitate banks offloading NPL’s in the aftermath…
Looking at the most recent data in the European Banking Authority quarterly Risk Dashboard (published on 5 October 2020), it becomes abundantly clear that COVID-19 is beginning to manifest itself in the NPL market with the cessation of the multi-year declining trend in NPL levels.  The NPL tide has clearly changed, and if you consider the new crop of NPL’s when coupled with those legacy impaired assets stemming from the global financial crisis, it becomes…
Read time: 3 minutes 50 seconds Fourteen years ago this September, I distinctly recall attending a conference hosted by the European CMSA that was focussed on the advent of CRE CDO’s. At the time, the emergence of these structures was seen as an extremely exciting development as it marked a natural progression for the maturing CRE finance market (following the success of the product in the US). Additionally, it showed there was an overriding need…
Whether you are a supporter of using CMBS to finance commercial real estate or not, the simple fact is that it provides an efficient mechanism to transfer commercial real estate loan risk away from the banking sector, whilst at the same time providing much needed transparency to the commercial real estate lending market. In light of these hugely positive attributes, not only will CMBS continue to have a role in financing commercial real estate, but…
Read time: 3 minutes 15 seconds In June 2020, three of the large global rating agencies – Moody’s Investors Service (“Moody’s”), Fitch Ratings (“Fitch”) and S&P Global Ratings (“S&P”) reviewed India’s sovereign credit rating. Interestingly, the agencies diverged in their approaches – Moody’s, which had previously rated India a notch higher than S&P and Fitch, downgraded India to ‘BAA3’ from ‘BAA2’ and retained a negative outlook on the rating; Fitch retained India’s sovereign ‘BBB’ rating,…
Read time: 2 minutes 20 seconds The economic fallout of COVID-19 will be hugely significant for the European CMBS market, as a perfect testing environment has been created to truly examine the resilience and robustness of CMBS 2.0. Indeed, the impact of COVID-19 will be a true litmus test as to whether those structural reforms that emanated from the CREFC guidelines issued in November 2012 (Market Principles for Issuing European CMBS 2.0) and the investor…
Read time: 5 minutes 45 seconds The Financial Conduct Authority (FCA) is to be given new powers to make changes to the methodology of LIBOR for certain “tough legacy” contracts. The UK Government has announced that it intends to bring forward legislation amending the Benchmarks Regulation 2016/1011 as amended by the Benchmarks (Amendment) (EU Exit) Regulations 2018, which would provide the FCA greater powers in relation to benchmarks (such as LIBOR) recognised as “critical”, in…