Mayer Brown has maintained an active and varied CDO and CLO practice for over twenty years – since our work on the ground-breaking FRENDS transaction (a CLO of highly leveraged bank loans).

We represent clients in arbitrage and balance sheet, cash flow and market value, and funded and synthetic CDOs, with underlying collateral pools, ranging from bank loans, high-yield bonds, asset-backed securities, mortgage-backed securities, trust preferred, and similar securities, to distressed debt, emerging market debt and project finance debt.

We helped to develop the trust preferred CDO market as a capital raising vehicle for smaller banks and insurance companies and also REITs. Trust preferred CDOs have become indispensable to smaller or regional banks and insurance companies needing to raise smaller amounts of hybrid capital.

We represent sponsors, arrangers, collateral managers, investors, trustees and rating agencies and are frequently engaged as overall transaction counsel. This broad client base complements the firm's technical legal capabilities, enables the firm to keep abreast of CDO market developments and provides valuable information regarding market custom and practice, including insights as to appropriate compromises among various parties in interest in CDO transactions.

More recently, against the background of market turmoil and uncertainty, many of our financial institutions and fund clients have retained us to perform risk assessment and diagnostic work for large portfolios of complex financial instruments and help analyze their exposure including:

• Preparing reports for senior management based on analysis of dozens of CDOs for a major US banking institution acting as arranger, super senior investor, and CDS counterparty

• Evaluating the exposure of several major European banks resulting from hundreds of CDO and CDS investments

• Sophisticated analysis of each subprime mortgage-backed transaction comprising the ABX indices and identification of potential pricing and risk arbitrage opportunities; and sophisticated advice regarding numerous deal features that could require restructurings or result in controversy

Integrated Derivatives Experience
Structured finance transactions have become increasingly embedded with complex derivatives. As a result of the breadth of our practice, we are one of the most active firms in the market in the new generation of derivatives. This deep understanding has also allowed us to become a leading player in credit-linked and equity-linked note programs that are backed by derivatives as well as synthetic and hybrid CDOs that rely on credit default and total return swaps for their synthetic components.