Collateralised loan obligation (CLO) investors need
clarity on the level of involvement of the retention holder
before the market can recover, according to those close to the
Loan Market Association (LMA).
A LMA working group consisting of collateral
managers and arranging banks have approached the European
Banking Authority (EBA) for clarification on Article 122a of
the Capital Requirements Directive (CRD) the
skin-in-the-game risk retention requirements for originators
and sponsors and the accompanying guidelines.
David Quirolo of Ashurst, who represented the
working group, said the biggest ambiguity is what ongoing role,
if any, the equity investor whos holding the risk
retention needs to have.
Do they need an ongoing role, which can
create regulatory and tax issues, or can they just be involved
in the selection of the initial portfolio of assets and the
initial structuring of the deal? said Quirolo.
Clarifying that would be...