JULY 2013
World Report - Offshore
15
Appleby Reports CLo Activity for 2013
Collateralised Loan
Obligation (CLO) deals increased by a dramatic 151% in the first half of 2013 when compared to the first six months of 2012, according to Appleby, one of the world's largest providers of offshore legal,
fiduciary and
administration services. This continues a three-year trend in the rapid increase of CLO issuances, with the number of deals growing by more than 300% between 2011 and 2012. The findings are detailed in Appleby’s inaugural CLO Insider Report, which provides data, insight and analysis on the global CLO market, focusing on the first half of 2013.
A total of 98 CLOs closed in the first half of 2013—a massive increase on the 39 deals that closed in the first six months of 2012.
“With the value of the market growing over 260% since 2011, it certainly seems that institutional investors are continuing to find value in CLOs,” said Julian Black, Appleby’s Global Head of Structured Finance. “With an estimated US$370bn in assets under management and growing, this market is blossoming as CLOs offer attractive risk-adjusted returns, as well as low default rates.”
In the first six months of the year, the top 10 deals by value increased by an average size of US$40m over the second half of 2012, and a significant US$175m over the same period in 2012. The report also found that with US$47bn of issuance, the first half of 2013 was the biggest half year ever in terms of value for CLOs
and CDOs. The average deal size for CLOs closed during this time was US$482m.
There are a handful of deals emerging from Europe, including Cairn CLO III, Dryden XXVII and Grand Harbour I, which are being issued under Rule 122A. The Appleby report suggests, however, that European activity for the remainder of 2013 is fairly unpredictable.
“We are seeing a trickle of deals emerging from Europe, but we will be monitoring this market with interest against
the
backdrop of Europe being a tougher market, and proposed regulatory changes within CRD IV which may stall the market. Both these factors could lead to an unsettled time,” said Julian Black.
ogier in Jersey advise on two key financings for Glencore Xstrata
Ogier in Jersey has advised a syndicate of lenders in connection with a US$17 billion revolving credit facility for Glencore Xstrata, believed to be one of the largest loan transactions to have completed in the City of London this year so far. Ogier were also appointed as Jersey legal advisors by HSBC Bank plc as agent in connection with a further US$750,000,000 term and revolving credit facility granted to Glencore International AG as borrower with Glencore Xstrata
plc as parent
guarantor and which was signed on 3 July 2013.
The US$17 billion revolving credit facility replaced the existing credit facilities obtained by Glencore and Xstrata prior to their merger on 2 May this year. The new credit facility will be used by the Anglo- Swiss multi-national commodities trading and mining company for general
purposes.
Christopher Byrne, the Ogier Jersey partner advising on the transaction, said: "We are
delighted to have provided Jersey legal advice as the syndication of these loans has been very successful and is evidence of the support given to Glencore Xstrata by the banking sector."
The Ogier team in corporate
Jersey consisted of partner Christopher Byrne, managing associate Bruce MacNeil and associates Kylie Maguire and Emily Barette. The English legal advisers included Clifford Chance LLP acting for the syndicate of lenders and Linklaters LLP acting for Glencore Xstrata.
A senior team from Carey Olsen across both Guernsey and Jersey was extensively involved in the consultation process and has welcomed these changes to the Code.
The Takeover Panel’s amendments to the Code, which come into effect on 30 September 2013, will make all companies listed on AIM, and which are incorporated in Guernsey, Jersey, UK and Isle of Man, subject to the Code. Currently, only companies which are treated by the Takeover Panel as being centrally managed and controlled in Guernsey, Jersey, UK or Isle of Man are subject to the Code. As a result of these changes it will no longer be necessary to satisfy such residency test for the Code to apply. This is expected to be welcomed by those companies which are managed and controlled elsewhere such as the large number of Chinese, Asian and other international groups which are listed on AIM.
takeover Code to be extended to AIM listed companies
Changes to the Takeover Code (the Code) are expected to offer significant advantages to Guernsey, Jersey, UK and Isle of Man companies listed on the Alternative Investment Market (AIM) of the London Stock Exchange. The Code establishes rules applying to takeovers and is principally designed to ensure fair and equal treatment of shareholders in relation to takeovers.
Carey Olsen corporate partner, Mike Jeffrey, said: “In our experience, AIM- listed companies wish to be subject to the Takeover Code and have, until now, been forced to rely on provisions within their constitutional documents which replicated the Code if they are managed and controlled in places such as China and the Far East. However, in practice, these provisions could not fully replicate the position under the Code, not least because the Takeover Panel did not have jurisdiction to oversee takeovers.
“These companies should now consider removing such provisions from their documents particularly if there is any inconsistency with the provisions of the Code. Also, companies which are incorporated in jurisdictions other than Guernsey, Jersey, UK and Isle of Man should consider whether they wish to migrate to such jurisdictions to take advantage of Code application.
“Already known for sophisticated corporate laws, electronic trading and communication enabling provisions and tax neutrality, these changes to the Code enhance Guernsey and Jersey’s
reputation
internationally for groups seeking to list their shares,” said Mr Jeffrey.
The Takeover Code will continue to not apply to open-ended investment companies.
www.lawyer-monthly.com
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