Search results for

Non-performing loans are a serious obstacle to the region’s economic recovery. Freshfields’ Agnes Molnar analyses the local and cross-country initiatives that promise to find value in these bad assets

Mayer Brown’s Kevin Hawken, Carol Hitselberger and Jason Kravitt explain why the revised securitisation framework will affect EU and US banks differently

Pedro Cortés Marta Mourão The Legislative Assembly is appraising a proposal to amend Decree Law 40/95/M of August 14, which establishes the right to compensation for occupational accidents and diseases. To further enhance the protection of rights of injured workers and to clarify the procedures necessary to compensate damages arising from occupational accidents and diseases, the draft law provides for a wider range of situations that may be considered an occupational accident.

Recently there have been some notable rulings by Mauritian courts. The first is Crociani and others v Crociani and others and Princess Camilla de Bourboun des Deux Siciles. In the trust deed in question, the relevant part of clause 12 stated: 'thereafter, the rights of all persons and the construction and effect of each and every provision hereof shall be subject to the exclusive jurisdiction of and construed only according to the law of the said country which shall become the forum for administration of the trusts'.

Banji Adenusi Recent mezzanine financing in Nigeria continues to adapt globally accepted structures to meet local conditions, especially in view of the recent economic reality. A key concern for foreign lenders relates to the structure of the transaction. This has taken the dimension of junior secured loans subordinated to senior lenders, in which the obligations of the borrower group to repay is passed through special purpose vehicles (SPVs) set up to warehouse the assets of the borrower group, with the SPV maintaining back-to-back service contracts with the borrower group. Two asset financing and expansion transactions in the oil-servicing sector recently adopted this structure. In both instances, assets were split between two SPVs, with the mezzanine lender acquiring a subordinated claim to the assets of the first SPV, and a first ranking claim to the assets and receivables of the second SPV. What is most interesting (although usual from an international standpoint) is the common thread running through these transactions – the insistence by the lenders on the inclusion of cross-default and cross-acceleration provisions in the financing agreements in relation to the borrower's other financings, creating a domino effect on the borrower's obligations. Counterparties often negotiate these provisions, including the instances that trigger the operation of the clauses, along with the restructuring conditions. From the lender's perspective, these provisions are designed to mitigate the broad spectrum default events that a transaction might be exposed to, with a view to expanding the scope under which a mezzanine lender can accelerate outstanding repayments. The borrower's inability to meet its financial obligations to its other financiers raises credible concerns about its ability to meet obligations to the mezzanine lender, with the implication that rather than wait for a payment default under its facility to the borrower, it would exercise the right to sit with the senior lenders as creditors of the borrower.

José Miguel Puiggrós Gabriela Dañino Although Peru has a strong track record in developing infrastructure projects, it still has one of the largest infrastructure deficits in the region. There are many projects in different sectors of the economy that have been granted more than $12 billion by the Peruvian government between 2013 and 2014, which are expected to obtain financing and begin construction during 2015. Many of these projects will be financed under co-financed schemes, which will require the granting of government credit enhancements. A stable legal framework aimed at promoting private investment in large scale infrastructure projects, and a steady positive macroeconomic performance, have contributed to the development and bankability of infrastructure projects in Peru. Specifically, credit enhancement schemes granted by the government have played a leading role in attracting both investment and financing sources for this type of project. However, such schemes have evolved since the first projects, where they were incorporated as part of the financing structure.

Vu Le Bang Under the Ordinance on Foreign Exchange Control of Vietnam, foreign investors participating in business cooperation contacts (FIs) and foreign invested enterprises (FIEs) must open a direct investment capital account (DICA) at an authorised credit institution. Such institution must be one used for investment capital contribution, principal investment capital remittance, profits, and other legitimate receivables. In this regard, the State Bank of Vietnam (SBV) issued Circular 19/2014/TT-NHNN (Circular 19), effective from Sept 25 2014, to provide further guidelines. Notably, under Circular 19, FIs and FIEs are permitted to open a DICA in Vietnamese dong, which was not permitted previously. A DICA should be used to perform FIE receipt and expenditure loan transactions, regardless of the type (whether a domestic or a foreign loan) and term of the loan (whether short-, medium- or long-term). DICAs were originally used to deal with foreign loan transactions prior to Circular 19, in relation to FIE loan transactions. Further, payments of capital and project transactions in relation to FIEs should be performed through a DICA. While welcoming Circular 19, many banks in Vietnam have so far raised concerns over its strict implementation, and over the increased obligations it imposes. Specifically, if domestic loans are strictly subject to a DICA, it will likely become more burdensome for all the relevant parties, including the borrower, lender, and bank controlling the DICA. More importantly, it has been argued that the wording regarding a DICA could be interpreted as either 'is allowed to use' (meaning optional), or 'has to be used for' (meaning compulsory), in relation to certain activities under Circular 19.

Tolga Çabakli Isil Ökten In May 2014, a new paragraph was added to the Capital Movements Circular (issued by the Central Bank of Turkey (CBT)) that limits the loans between a financial institution or entity residing outside Turkey (Foreign Lender) and a company residing in Turkey (Turkish Borrower). According to the Circular, a Foreign Lender and Turkish Borrower can not to enter into a loan agreement that: (i) entitles a Turkish Borrower to utilise and repay the facilities on different dates subject to loan limit, (ii) does not include a specified term, (iii) includes a floating interest rate generally, and (iv) works as a debtor's current account (revolving). Upon a further amendment in November 2014, it was been made clear that this provision does not apply to the banks or leasing, factoring and financing institutions, but only to Turkish companies. Despite the lack of any official guidance on this issue, it's understood that the underlying reason behind the change is CBT's intention to ensure that each loan is properly recorded, and to identify the term of each loan so that the applicable taxes can be calculated accordingly. More specifically, the intention of this legislation is to come up with a loan agreement or similar document evidencing each drawdown under a revolving facility agreement. Further, if the Turkish Borrower reaches the total limit specified in the revolving facility, this agreement would be deemed to have been exhausted, and a new credit limit should be opened through a new loan agreement. Each and every loan agreement, including those evidencing the drawdown, should be reported by the intermediary Turkish bank to the CBT. The amendment would prevent the foreign re-borrowings (in respect of the repaid loans) made under a revolving facility exceeding the limit initially agreed and notified to the CBT even if certain portion of such loan is repaid.

Rafiq Jaffer Factoring is a financing technique that enables an exporter to collect the purchase price of the goods relating to an export transaction before the due date of payment. Typically, banks in Qatar act as factors and purchase receivables relating to the export transaction. The same technique is also used for financing contractors and sub-contractors, where works have been performed or goods and services have been supplied and payment under the corresponding invoice is payable after a period of time (such as 90 days). This latter technique is referred to as invoice discounting. One key commercial consideration for companies seeking to sell their receivables is for the receivables to be removed from their balance sheet as a debt and to appear as revenue that has been collected. This treatment is possible if the receivables are sold on a without-recourse basis. Auditors usually require a legal opinion to confirm that a true sale of the receivables has been effected.

Rocky Alejandro L Reyes In 2013, after several decades of implementing measures to solve its economic problems, the Philippines attained an investment grade rating from the big three credit rating agencies. The investment grade rating and the fast pace of economic development in the Philippines should have attracted a lot of foreign direct investment (FDI). However, Philippine laws' restrictions on foreign ownership of land, educational institutions, public utilities and mass media, to name a few, continued to hinder the growth of such investment. Many foreign ownership restrictions on certain business activities remain in the Constitution and statutes. For example, the ownership of private lands is exclusively reserved for Philippine citizens and corporations with at least 60% of its capital owned by Filipino citizens. The exploitation of natural resources, including all modes of potential energy, is subject to the same nationality requirement. This limited foreign equity investment in renewable energy development, such as hydro, geothermal, wind and solar power generation.