Rating agency definition

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EU Covered bonds—timeline

EU Covered bonds—timeline This timeline tracks the key developments relating to an integrated covered bond framework being established in the EU. Glossary of defined terms This section sets out some defined terms used in this timeline. BRRD—Bank and Recovery Resolution Directive 2014/59/EU CBIC—Covered Bond Investor Council CMU—Capital Markets Union CRR—Capital Requirements Regulation (EU) 575/2013 EBA—European Banking Authority ECB—European Central Bank ECON—European Parliament’s Committee on Economic and Monetary Affairs ECSP—European Crowdfunding Service Providers ESNs—European Secured Notes EMIR—European Market Infrastructure Regulation (EU) 648/2012 ESRB—European Systemic Risk Board ICMA—International Capital Markets Association MiFID II—Markets in Financial Instruments Directive 2014/65/EU OTC—over-the-counter SSPE—securitisation special purposes entities STS securitisation—simple, transparent and standardised securitisation UCITS IV—Undertakings for Collective Investments in Transferable Securities Directive 2009/65/EC Covered bond framework—key developments Date Issuing body Document Description 10 May 2022 Official Journal of the EU Commission Delegated Regulation (EU) 2022/786 of 10 February 2022 amending Commission Delegated Regulation (EU) 2015/61 to supplement Regulation (EU) No 575/2013 of the European Parliament and the Council with regard to liquidity coverage requirement for credit institutions...

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Credit linked notes

Credit linked notes What is a credit linked note? A credit linked note (CLN) is a funded credit derivative (see Practice Note: What are credit derivatives?). Unlike a credit default swap (which is in essence its unfunded equivalent), a CLN will be reflected on the balance sheet of the issuer of the CLN. A CLN takes its underlying value from the credit risk of a third party, known as the 'reference entity'. At its most simple, a CLN is a note issued by an issuing entity (the protection buyer) whereby on the issue date the noteholder (or protection seller) pays the face amount of the note and thereafter receives an agreed rate of return until a credit event occurs on the underlying reference entity or the note matures. A CLN provides an investor with the returns of a potentially risky reference entity without needing to own that reference entity. Who issues and buys credit linked notes? Credit linked notes are generally issued by...

Intercreditor payment priorities and requisite majorities

Intercreditor payment priorities and requisite majorities Background The aim of the intercreditor agreement (also known as a deed of priority) is to try and deal with potential conflicts which will inevitably arise between the different classes of secured lender on a restructuring. Waterfall of payments The intercreditor agreement usually sets out a payment waterfall directing the security trustee how to apply any money received by it (whether sale proceeds, proceeds of litigation or payments from a debtor wrongly paid to a junior creditor and handed over under turnover provisions) either (i) in all circumstances or (ii) during normal operations (pre-enforcement) and post enforcement ie a 'flip' clause (see below). The payment waterfall will generally provide for the security trustee's fees to be paid out first, and then money paid to creditors according to their ranking (usually secured lenders appearing at the top of the list) with any surplus being returned to the debtors. A typical payment waterfall may require the security trustee to apply monies received towards:...

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Letter to lenders governing appointment of creditors’ committee

Letter to lenders governing appointment of creditors’ committee To: The persons listed in Schedule 1 to this letter [insert names of Lenders] From: [insert name of solicitors for the Creditors' Committee or the name of the Chair] Date: [insert date] Appointment of Creditors' Committee We refer to the discussions at the meeting of creditors convened by [insert name of debtor company] (the Company) to discuss the proposed restructuring. 1 Definitions and interpretation 1.1 Definitions In this letter, unless otherwise provided: Business Day • means a day other than Saturday, Sunday and public holidays when clearing banks generally are open for business in London; Chair • means the Lender appointed to chair the Creditors' Committee under the Creditor's Committee Agreement; Commitment • means (a) any undrawn amount which a Lender has committed to make available to the Company (but excluding any undrawn uncommitted amounts); (b) the principal amount of a Lender's participation in any utilisation by the Company, in each case under the Finance Documents; Committee...

Creditors’ committee agreement

Creditors’ committee agreement This Agreement is made [insert day and month] 20[insert year] Parties 1 [insert name of lender] a company incorporated in [England and Wales] under number [insert registered number] whose registered office is at [insert address]; 2 [insert name of lender] a company incorporated in [England and Wales] under number [insert registered number] whose registered office is at [insert address]; 3 [insert name of lender] a company incorporated in [England and Wales] under number [insert registered number] whose registered office is at [insert address]; (each a Committee Member and together the Committee Members) whose contact details are set out in Schedule 1; and 4 [insert name of the debtor company] a company incorporated in [England and Wales] under number [insert registered number] whose registered office is at [insert address] (the Company). Recitals (A) The Company is negotiating with it's Lenders to agree a restructuring of its [business and] debt. (B) The Company [is seeking to negotiate OR has negotiated] a [Standstill...

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What are the implications of coronavirus (COVID-19) for MAC clauses in facility agreements?

What are the implications of coronavirus (COVID-19) for MAC clauses in facility agreements? Why are material adverse change (MAC) clauses in the spotlight? The coronavirus (COVID-19) outbreak has already caused some businesses to fail and financial distress to many others. Governments and regulators are urging lenders to be supportive of businesses, especially those that are, the outbreak aside, financially sound. However, lenders will still be looking to review their finance documentation and ascertain their rights at an early stage. Facility agreements typically include a list of events of default. Breach of any of these by the borrower will give the lender(s) the right to exercise certain rights under the facilities agreement, such as accelerating the loan (ie demanding early repayment) or enforcing security. An event of default can also have other consequences under the finance documentation, such as: • giving the lender the right not to lend any further amounts under the facility agreement (known as a drawstop), and • enabling the lender to transfer commitments...

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Corporate weekly highlights—1 February 2024

This week's edition of Corporate weekly highlights includes: the Financial Reporting Council publishing guidance to aid companies in their application of the UK Corporate Governance Code 2024 and the publication of the FCA’s Primary Market Bulletin 47 which looks at developments concerning the UK’s short selling regime and the latest Credit Rating Agency UK Market Share Report.

Significant new Court of Justice decision on automated decision-making (Schufa Holding AG)

Information Law analysis: The Court of Justice has delivered an important judgment on the scope and interpretation of the ‘automated decision-making’ framework under the EU General Data Protection Regulation, Regulation (EU) 2016/679 (EU GDPR). It is a decision that could have significant implications for service providers who use algorithms to produce automated scores, profiles or other assessments that are relied upon by customers in a decision-making process. James Clark and Verena Grentzenberg, partners at DLA Piper, discuss the ruling and its implications.