U.S. Risk Retention in the CLO Market

“U.S. Risk Retention in the CLO Market” appeared in the May 2016 issue of The Review of Banking & Financial Services.

The article was co-authored by Cleary Gottlieb counsel Joyce McCarty and associates Macey Levington, Beau Sterling and Sarah Crandall.

“The risk-retention rule jointly issued by federal agencies requires that, after the Compliance Date (December 24, 2016), sponsors of securitization transactions retain 5% of the credit risk of the assets being securitized. The authors discuss the basic requirements of the rule, and its application to refinancings and indenture amendments of CLO notes. They then turn to the financing and structuring of the retained interest, and options for U.S. CLO managers to participate in the EU CLO market.”