White lists do more harm than good

Author: Danielle Myles | Published: 15 Sep 2014

Issues surrounding white lists in loans to financial sponsors are damaging secondary market liquidity, and may not achieve borrowers’ intended goal.

The practice sees private equity borrowers include in their facility agreements a list of pre-approved buyers of the loan.

It is becoming increasingly prominent in Europe, and is creating further issues for the already struggling secondary market.

Craig Scordellis, senior portfolio manager at CQS, said the introduction of the lists is not a problem per se, but it can present challenges for loan managers. This is exacerbated by the fact that the white list applies to subsequent transfers, which further limits the willingness of buyers to agree to take on the loan.


 

 

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