Articles by author
Transfers of risk or risky transfers? Transferring hedging positions in respect of non-performing loans
There are a number of key decisions to be made when a hedge counterparty wishes to transfer a hedging position in respect of a non-performing loan. These decisions are driven by legal and commercial considerations in the context of the transaction documents. A number of these considerations are set out below, but each transaction is different and additional considerations may arise. Unless otherwise indicated, this article will assume that if the transaction terminated, the borrower would be obligated to make a payment to the hedge counterparty and that the hedging is entered into under the terms of an ISDA master agreement (hereafter, an ISDA). For ease of reference, the existing hedge counterparty is referred to as the hedge counterparty and the proposed transferee as the transferee, whether before or after any transfer.
1 FEB 2022Synthetic risk, real issues: secondary transfers of credit risk instruments
There are many ways of synthetically transferring risk, including credit default swaps, sub-participations, financial guarantees and insurance related products. Each such method (the relevant contract/instrument being an “Instrument”) gives rise to unique considerations but there are several points that are likely to be relevant whenever the party that has synthetically acquired the risk wishes to transfer its position to a third party. This article considers those relevant issues.
1 MAR 2023
