Founded in Paris in 1920, Gide is a leading international law firm with 12 offices spread throughout the world.
Gide is physically present in six regions of the world, with 11 offices, enabling it to act on cases globally.
One of the main concerns for market participants in the European Collateralised Loan Obligation (“CLO”) market of late has been the scope of the impact of Brexit on existing methods of risk retention currently employed in CLO transactions. In particular, there is a concern that the route of “sponsor” risk retention may no longer be available in the case of deals with UK asset managers, with the result that the investors concerned find that, following Brexit, they are no longer compliant with EU risk retention regulations. Another concern relates to the extent to which Dutch special purpose vehicles can continue to be used where MiFID passporting is no longer available to UK asset managers.
We set out our observations on some of the related issues that have begun to be discussed, and our view on the road ahead. Ultimately, we think that there are a number of solutions that may be available to mitigate the risk of future non-compliance, although the view from the market is that participants should wait until there is more clarity as to the future regulatory treatment. For example, whether existing risk retention compliance structures will continue to remain viable via an EU sanctioned grandfathering arrangement.
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