Sidley has closed over 260 CLO/CDO transactions globally, totaling billions of dollars since 1994, including the first CLO by a U.S. bank in 1997. Such transactions include both static and revolving structures, with both onshore and offshore issuers, and with funding provided by commercial paper conduits and Rule 144A and Regulation S placements. Our clients have included originators, underwriters, lead managers, placement agents, investors (including conduits) and liquidity and enhancement providers. Securitized loans have included loans to investment grade and non-investment grade borrowers in a wide variety of jurisdictions, with diverse payment features.
Sidley is also a recognized leader in the arena of collateralized bond obligation (CBO) and collateralized debt obligation (CDO) transactions. We represent market participants involved in all aspects of these transactions, including issuers, underwriters, asset managers, hedge providers, investors (including institutional investors and commercial paper conduits) and bond insurers. These transactions have employed both cash flow and market value structures and have included some of the most innovative transactions in the market.
Sidley has been at the forefront of the development of “synthetic” securitizations, in which funding raised in the capital markets is used not to acquire debt obligations in an outright purchase, but rather to fund conditional payment obligations linked via credit derivative transactions to the performance of those obligations. In our Chicago, New York and London offices, we represent financial institutions as sponsors of such transactions (including the bank sponsor of the first synthetic CLO in 1997), underwriters or lead managers, trustees and similar service providers and providers of “super senior” risk protection in conjunction with such transactions.
Issues addressed in CLO, CBO and CDO transactions have included an analysis of regulatory relief requirements, disclosure requirements and other securities law issues, commodities law issues, off-balance sheet treatment for accounting and regulatory purposes, insurance regulatory requirements, participation and assignment structures, linked and de-linked ratings, withholding and other taxes (including analysis of double tax treaties), impact of unfunded commitments on regulatory objectives and rating agency analysis, provision of funding during amortization period, assignment restrictions, confidentiality restrictions and hedging requirements, setoff rights of borrowers and the selection of jurisdiction of the special purpose vehicles.
