We are often asked by our clients: “What are you seeing? Anything interesting in the market on your side?” Our answer, as Cayman counsel, is more often than not that we are a ship floating in a tide and what they see as trends in the U.S. fund structuring and fund finance market will (or already have) washed up on our shores. One such trend that we continue to see progress in the market is in the confluence of the private equity and insurance sectors. This courtship is taking a variety of forms, but as private equity sponsors continue to look towards the vast reservoir of investable capital available in the insurance market, and insurers look back across the river at the stellar returns of such private equity sponsors, we are increasingly seeing the use of rated note feeders established as Cayman Islands limited liability companies (LLCs) or exempted limited partnerships (ELPs) to bridge the accessibility gap between insurers and private equity funds.
On July 11, the Alternative Reference Rates Committee (the “ARRC”) published a “Playbook” to assist market participants in transitioning their legacy LIBOR contracts to an alternative rate by June 30, 2023. Cadwalader's LIBOR transition team attorneys summarize here the steps that the ARRC recommends for the successful implementation of fallbacks in legacy LIBOR contracts.
Cadwalader’s financial services team hosted Part 3 of its four-part series on capital relief trades earlier this week. You can access webinar replays here:
- Part 1: CRT Overview and Regulatory Capital Basics
- Part 2: Unpacking Regulation Q: CRT Structuring
- Part 3: U.S. Legal and Regulatory Considerations
Registration details on Part 4 will follow.
ANZ is seeking both a Director and an Associate Director of Research & Analysis to cover the Funds sector within its Financial Institutions Group.
As interest rates rise and a potential recession looms, we’ve seen a flight to quality as new entrants seek to participate in our fund finance market. While most deals on our books have just one lender and one fund as borrower, multi-lender facilities have historically provided outsized loan commitments. To wit: of the nearly 900 new deals and rebooking amendments our U.S. fund finance team did last year, only 8% were syndicated on initial close. Yet of the almost $200 billion of lender commitments in our U.S. portfolio during that time, almost two-thirds came from syndicated credit facilities. A significant part of that disparity comes from new lenders joining deals after origination. We expect that trend to continue. This article assesses the elements, issues and hot topics for bringing new lenders into a transaction from the perspective of the borrower, the administrative agent and the incoming lenders.
Bank earnings season kicks off in less than a week when three banks, all active fund finance lenders, report on July 14. Revenue growth has become more difficult to come by with mortgage originations slowing into rising rates, investment banking fees likely meaningfully lower, and asset management income also down due to declines in equity and fixed income prices.
The Fund Finance Association this week followed up on last week’s 6th Annual European Fund Finance Symposium requesting feedback via an event survey, available here. FFA additionally released an online version of the available slides from the Preqin presentation (click here) and an online copy of Global Legal Insights’ Fund Finance 2022 Edition (click here), as well as photos from the symposium (click here).
Private Funds CFO this week published an article coming off of the FFA’s European Fund Finance Symposium in London last week that covers the varying use cases by sponsors with NAV loan proceeds. The subscription-required article is accessible here.
Help us help you! We are looking to curate the WFF experience with more topical events for everyone. If you’ve attended (or plan on attending) a WFF event this year, we would love to hear from you. To participate in this survey, click here.
Private Funds CFO writes about the greater participation of private credit funds, insurance companies and other non-bank lenders in the fund finance market, pointing to a real-time poll taken during last week’s FFA European Fund Finance Symposium. The subscription-required article is accessible here.