Spotlight
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Are the times ripe for “super senior” capital structures that include term loan debt?
In this Spotlight article Francesco Lione considers the pros and cons for rolling out “super senior” capital structures that include term loan debt, in addition to or as an alternative to secured bonds.
19 March 2024Risk elimination by legislating: the limits of the law and challenges of reality
This Spotlight article, the first of two looking at significant policy making challenges, argues that legislators and regulators too often seek to avoid and even eliminate risks, at disproportionate social and economic cost to the desired policy outcomes. This reflects challenges in setting better policy goals. It gives examples across financial services and other sectors. Accountability is needed to achieve outcomes, but not all failures or bad outcomes require change of law or regulation. The balance between improving standards and real outcomes on the one hand, with controlling social and economic costs on the other, needs more complex consideration and comprehensive cost-benefit assessment.
19 March 2024Flight of the deposits
As illustrated by the recent failure of Silicon Valley Bank, N.A. (SVB) and the stabilisation of its UK subsidiary Silicon Valley Bank UK Limited (SVBUK), this Spotlight article examines how the flight of uninsured deposits from banks in financial difficulty can be a decisive factor that tips them towards a resolution process or even insolvency.
19 March 2024Governance to keep net zero transitions on track
This Spotlight article sets out a governance framework – comprising robust board oversight, strong alignment mechanisms, and regular external validation – that companies can deploy to ensure that their net zero pledges stay on course. In addition, it illustrates how firms in different sectors are applying the governance measures discussed herein.
19 March 2024A wolf in sheep’s clothing: are transfers of economic interests undermining privity of contract in the medium-term loan market?
In this Spotlight article Graham Penn considers how recent changes to the form and legal substance of sub-participation agreements (and other more conventional credit derivatives) are undermining privity of contract between the borrower and its lenders and creating a form of privity with the sub-participant.
19 March 2024The urgent need for better law and rule making: challenges and solutions
This article, the second of two (see ‘Risk elimination by legislating: the limits of the law and challenges of reality’ (2023) 5 JIBFL 287) looking at significant policy making challenges, argues that too much recent legislation and regulation is of poor quality, often developed with good intentions but in silos, without effective consultation, proportionality or consistent principle. Too much is created so policy makers can be seen to have “done something” when it will not address the real goals. The article proposes possible solutions, including changing policy maker incentives and the creation of a new Parliamentary Select Committee to introduce accountability for legislative and regulatory outcomes, comparable to spending accountability.
19 March 2024Financial Services and Markets Bill: from retained EU law, to revocation and restatement
The Financial Services and Markets Bill 2022-23 (FSM Bill) makes way for potentially sweeping reforms to the UK’s post-Brexit financial services regulatory framework.
19 March 2024Increasing interest? Hedging considerations in light of rising interest rates
If what goes up must come down, then what comes down will go back up; such is the case with interest rates. Taking approximate figures for three-month ICE GBP LIBOR (source: Bloomberg): an increase in that rate from 0.26 bps on 31 December 2021, to 3.36 bps on 1 November 2022, appears steep. It is easy to forget that the same rate was 6.3 bps on 30 September 2008. The present rising interest rate environment is refocussing the minds of borrowers on the importance of hedging interest rate risk.
19 March 2024Fixed and floating charges: still favouring absolutism over multi-factored nuance
The academics did not fare well in Re Avanti Communications Ltd (in admin) [2023] EWHC 940 (Ch). Edwin Johnson J determined that the security in issue was fixed, not floating, but not without finding himself in respectful disagreement with Beale, Bridge, Goode (if only by book title), Gullifer and Worthington. It is perhaps predictable that one of us might rush to a defence. I hesitated, appreciating that judges are not similarly free. But the issue is important, and the approach advocated in Avanti appears, with the greatest respect, and even greater admiration for the unravelling of security documents needed in that case, to be unsupported by the cases and unworkable in practice. In short, even if the answer is right (space prevents that being addressed here), the means of reaching it is surely not. What follows seeks to defend that claim, and also to address further issues raised in Avanti which continue to create unnecessary confusion in this area.11 1
18 March 2024Rethinking rights of use as an English law concept after Brexit
The enforceability of rights of use in English law was often doubted until legislation implemented the EU Financial Collateral Directive in 2003. Statutory safeguards are likely to be retained in a similar form post-Brexit but are not comprehensive nor free from uncertainties. This Spotlight article argues that it is time to rationalise rights of use as a valid concept under English common law.
18 March 2024
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