CDOs and CLOs

Übersicht

Mayer Brown has maintained an active and varied CDO and CLO practice for over 20 years—advising sponsors, arrangers, collateral managers, investors and trustees on transactions and portfolio matters. Mayer Brown's work in the CLO/CDO area began with the groundbreaking FRENDS transaction—a CLO of highly leveraged bank loans. We went on to help 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.

Recently, many of our financial institutions and fund clients have also 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.

In our transactional work, we represent clients in arbitrage and balance sheet, cash flow and market value, and funded and synthetic CLOs, CBOs and 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 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.

In connection with the recent consolidation among CDO managers, we have represented both buyers and sellers. We have structured auctions by sellers and advised buyers regarding appropriate due diligence and related matters, including integration of acquired CDOs. We have also advised clients regarding bid strategies, the appropriate process for obtaining required third-party consents (and “deemed” consents) and provided related opinions to permit affected transactions to be consummated. Since many CDO/CLO managers are now required to be registered investment advisers, we work closely with our registered advisor attorneys who have extensive experience with the regulatory issues that can arise.