K&L Gates’ Securitization and Structured Finance practice includes lawyers in offices throughout the United States, Europe, Asia, Australia, and the Middle East who represent sponsors, underwriters/arrangers, servicers, special servicers, collateral managers, investors, and trustees in a wide range of structured finance and credit risk transfer transactions.
We have significant experience in many transaction types including CLOs, structured credit products, ABCP conduits, repo-backed note financings, and medium-term note programs. We have broad experience across many asset classes, including automobile loans and leases, aircraft leases, residential and commercial mortgages, Shari’ah compliant instruments, and leveraged commercial loans. We work on registered offerings, Rule 144A and Regulation S offerings, and private placements. Our practice is global in nature and features close integration among partners in several jurisdictions who also provide dedicated and highly experienced tax, ERISA, bankruptcy, bank regulatory, and derivatives support.
Derivatives are an important feature of our Securitization and Structured finance practice. We routinely work with swaps and other derivatives used as hedges for assets or transactions. We have experience with synthetic risk transfers using total return swaps and credit default swaps. We also understand the documentation, insolvency issues, and regulatory considerations in swap transactions in relation to securitization and structured finance transactions.
We actively advise clients on swap regulatory developments under the Dodd-Frank Act and OTC derivatives regulation under EMIR. We also advise on key regulatory developments such as the impact of commodity pool operator /commodity trading advisor rules, matters such as the Volcker rule, and emerging credit risk retention requirements for securitization and structured finance in the United States, Europe and Australia.
We work closely with lawyers in other parts of our Debt Capital Markets practice group, as well as with lawyers in other practices, including Consumer Financial Services, Derivatives & Structured Products, Islamic Finance, Real Estate Finance, Restructuring & Insolvency, Transportation Finance, Project Finance, and Financial Services Litigation, depending on the nature of the matter and the underlying assets. In addition, as part of the largest fully integrated network of law offices and law partners of any global law firm, we draw regularly upon the comprehensive resources of the firm to address the full scope of related regulatory, legal, and other issues that arise in complex securitization and structured finance transactions across industries and jurisdictions.
We regularly represent arrangers, sponsors, and others in securitizations and structured finance transactions involving a wide range of consumer and commercial assets. Asset classes in which we have experience include automobile loans and leases, aircraft leases, airline tickets, renewable energy assets, trade receivables and inventory, intellectual property, investment property, and tax liens. We also regularly represent investors in connection with investments in non-mortgage ABS as well as in connection with due diligence for private equity investments in specialty finance companies with securitization platforms.
With respect to consumer assets, our Securitization and Structured Finance practice is closely related to our market-leading consumer financial services regulatory practice.
We regularly represent servicers, special servicers, trustees, rating agencies, and others in connection with securitizations of commercial mortgage loan portfolios and single large loans, and in restructurings of securitized mortgage loans and B-piece investments. We are also active in securitization of multi-tenant and credit-tenant commercial mortgage loans and REIT securities.
We have experience in a wide range of CMBS and CRE CLO transactions throughout the capital structure and across the deal life span:
For several years, we have represented a major rating agency in public CMBS transactions in the UK and Germany. We have also represented underwriters in issuances of agency-guaranteed CMBS in the United States.
We regularly represent arrangers, collateral managers, trustees, and other transaction participants in CLO and CDO transactions in both the United States and in European markets. We have experience in cash and synthetic CLOs, including cash-flow, market value, and balance sheet CLOs involving corporate, emerging market, and real estate loans, as well as single-tranche and full capital structure synthetic transactions.
The lawyers in our CLO/CDO practice have been active in the market since the early 1990s, and they have re-emerged, in the years following the financial crisis, as leading practitioners and innovators in the post-crisis “CLO 2.0” market in both the United States and Europe. We have advised clients on a number of matters relating to the CLO 2.0 market, including structuring transactions (both the United States and European) to comply with applicable “skin in the game” risk retention requirements under banking law and securities regulatory regimes.
Our CLO 2.0 transaction experience includes recently structuring CLO offerings designed to comply with the European Union’s evolving risk retention requirements, handling the only emerging-market assets CLO completed since the end of the financial crisis, and advising on the first transactions to include LIBOR-replacement mechanics and senior-note-repricing provisions. We have also been at the forefront of developing unique loan warehousing structures, including structures involving total return swaps, facilities, senior and subordinated participations, and secured loans.
We also advise our litigation and enforcement lawyers in matters involving pre-crisis CDO transactions.
The firm’s covered bonds practice is based primarily in London and New York and includes highly experienced lawyers in all legal disciplines associated with covered bonds, including structured finance and securitization, capital markets, banking and securities regulation, derivatives, tax, and insolvency.
We have considerable experience with the development of both “statutory” covered bonds (which are issued by issuers in accordance with established legislative or regulatory frameworks) and “structured” covered bonds (which are issued by issuers located in jurisdictions where such frameworks have not been adopted). Our lawyers have represented issuers and arrangers in a number of pioneering covered bond programs in the UK, the United States, and Canada.
United Kingdom Members of our covered bonds team advised the arrangers on the first UK covered bond programme, and since then have regularly acted for a number of UK issuers and arrangers in connection with the establishment of covered bond programmes and issuances thereunder. We have also acted for trustees in connection with the restructuring of several covered bond programmes of UK building societies.
United States and Canada Members of our covered bonds team advised Washington Mutual and Bank of America, as issuers, in connection with the structuring and establishment of the first two (and to date, only) U.S. covered bond programs, which were inaugurated in 2006 and 2007. They also advised one of the first Canadian issuers of covered bonds in connection with the establishment of its covered bond program in 2007. Since then, our lawyers have participated actively and visibly in industry groups that advocate for the introduction of legislation, regulation, and guidance for covered bonds in the United States.
K&L Gates is an active member of the Steering Committee of the U.S. Covered Bonds Council, which is administered by SIFMA and is a leading advocate for the introduction of covered bonds legislation in the United States. Our lawyers were also involved in consultations with the Federal Deposit Insurance Corporation as well as with the U.S. Treasury Department, as it developed its Best Practices for Residential Covered Bonds (which was published in July 2008). They have taken part in the comment process related to proposed covered bond legislation that has been introduced in the U.S. Congress.
Globally Our lawyers have also advised on the structuring of covered bond programs for issuers based in Australia and Latin America, and have advised trustees in connection with the restructuring of Irish and Greek covered bond programmes. The K&L Gates team is particularly well-poised to advise global issuers on offerings of covered bonds, including offerings into the United States. We have U.S.-qualified lawyers practicing in New York, London, and Hong Kong who are well versed in all aspects of both SEC-registered and private offerings of covered bonds, including all facets of due diligence, disclosure, and Rule 10b-5 letters. Additionally, our lawyers are familiar with the evolving U.S. regulatory landscape as it impacts covered bonds, both U.S. and non-U.S. issuers, and the global capital markets generally.
We have experience in securitizations of a wide range of off-the-run assets, including renewable energy receivables, municipal tax liens, and public authority financing in the United States and the UK. For example, as part of the Solar Access to Public Capital (SAPC) working group formed by the National Renewable Energy Lab (NREL), we have been integrally involved in efforts to create the legal and regulatory framework to make distributed solar power generation a viable securitization asset class.
Members of our team have advised on securitizations in emerging markets as well as Shari’ah compliant capital markets issuances such as sukuk transactions.
We regularly represent underwriters in offerings of residential mortgage-backed securities guaranteed by Fannie Mae, Freddie Mac, and Ginnie Mae as well as issuers and others in private label RMBS transactions in the United States. We also have extensive experience in UK residential mortgage-backed securitizations, including master trust programs and stand-alone RMBS transactions for UK issuers.
We advise investors on a variety of issues involving interpretation of pooling and servicing agreements and disputes over put-back rights. We have also represented clients in litigation and enforcement matters involving RMBS transactions.
We advise servicers and special servicers for RMBS transactions in relation to general servicing and consumer regulatory issues, transfers, asset management as well as loan assumptions and modifications, including REMIC and other tax implications.
Our extensive experience spans the range of disciplines essential to residential mortgage securitization, including tax, corporate, securities, derivatives, real estate, ERISA, and Investment Company Act practices. In addition, our residential mortgage-backed securities practice is closely related to our market-leading Consumer Financial Services regulatory practice, which has deep penetration of the mortgage banking and servicing industry.
We work closely with our Financial Services regulatory practice in relation to a variety of housing market reform issues, including the development of the covered bond market as a partial replacement for liquidity provided by U.S. government sponsored enterprises.