A team of our capital markets experts from across the globe recently attended SFIG Vegas 2018, the largest capital markets conference in the world. The Intertrust team was led by London-based Global Head of Capital Markets, Cliff Pearce, and included representatives from the Intertrust capital markets groups in the Cayman Islands, Jersey, New York and San Francisco. Intertrust was also a proud sponsor of the conference.
The issuers, investors, banks, lawyers, service providers and
trustees who gathered together in Las Vegas discussed a broad range
of trends affecting the global capital markets industry –
themes under discussion ranged from the continued appeal of
aircraft as an asset class for securitisation, to the anticipated
future role of marketplace lending in securitisation.
However, for our team, a few overarching themes emerged from our discussions with clients, business partners and peers during the conference, and a couple of these are summarised below:
- Increased focus on Europe: The 2018 conference
was characterised by an increased presence of European issuers,
banks and lawyers, tying in with certain trends which some market
participants anticipate will occur in the European market
throughout the rest of 2018.
In particular, greater levels of activity are anticipated from European non-performing loan (NPL) portfolios, driven in part by higher capital costs for holding NPLs narrowing the historic gap between buyers' and sellers' price expectations and encouraging banks to sell portfolios of NPLs, especially in Italy, Greece and Spain.
Our observations from the conference certainly reflect the fact that, in the first couple of months of 2018, Intertrust has witnessed an uptick in cross-border structuring requests from investors preparing bids for southern European NPL portfolios. These deals frequently require an SPV to be formed (and ancillary management and corporate services to be provided) in the jurisdiction in which the loan portfolio is domiciled. In addition, they often require the formation of an intermediary holding structure in, for example, Luxembourg or Ireland – complex, cross-border mandates for which Intertrust's broad global footprint is ideally suited.
- Risk retention: Since the D.C. Circuit Court's decision to overturn the risk retention rule as it applies to US open-market Collateralised Loan Obligation (CLO) managers was handed down just over two weeks before SFIG Vegas 2018 got underway, the likely consequences of this decision for market participants inevitably dominated some discussions at the conference.
Should the judicial pathways to a further review of the decision not be pursued, there is some consensus that a spike both in new CLO issuances and in refinancings may follow. However, given we observed an increased European focus at SFIG Vegas 2018, the D.C. Circuit Court's decision was not of equal significance to all conference attendees – those market participants in the EU CLO space are well aware that the EU risk retention rules continue to operate unchanged.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.