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Securitization and Structured Finance

Our securitization and structured finance practice includes lawyers in offices throughout the United States, Europe, Asia, Australia, and the Middle East who assist clients in the public and private distribution of structured finance securities, in both cash and synthetic form, and in domestic and cross-border transactions. We act for investment banks, originators, issuers, trustees, and rating agencies as well as other market participants such as investors, corporate service providers, servicers, liquidity providers, and swap counterparties.

Our experience encompasses all of the main asset classes, including commercial mortgage-backed securities, collateralized loan obligations, asset-backed securities, collateralized debt obligations, warehouse lending, and conduit programs for loan originators and servicers, and funded and unfunded structured products. We also have experience in all aspects of capital markets, including registered offerings and Rule 144A and Regulation S offerings, private placements and listed security offerings.

Our transaction types include structured credit products, asset backed commercial paper (ABCP) conduits, repo-backed note financings, and medium-term note programs. Our broad experience includes automobile loans and leases, aircraft leases, residential and commercial mortgages, Shari’a compliant instruments, and leveraged commercial loans. We have also been actively involved in advising clients on LIBOR benchmark replacement fallbacks for securitizations.

Increasingly, the dividing line between conventional finance and structured finance is blurred. We have the skills to adapt securitization technology to new situations and to meet the needs of new market participants. At the same time, for appropriate transactions, we have developed techniques and structures to enable our clients to securitize assets cost effectively, efficiently, and quickly. We use securitizations techniques to help achieve our clients’ business objectives, viewing the process in the context of their overall funding, regulatory, and investment strategies.

Our practice is global in nature and features close integration among partners in several jurisdictions who also provide dedicated and highly experienced tax, ERISA, bankruptcy, bank regulatory, and derivatives support. In addition, as part of an integrated global law firm, we draw regularly upon the comprehensive resources of the firm to address the full scope of related regulatory, legal, and other issues that arise in complex securitization and structured finance transactions across industries and jurisdictions.

Areas of Practice 

Asset Backed Securities (ABS)

We regularly represent arrangers, sponsors, and others in securitizations and structured finance transactions involving a wide range of consumer and commercial assets. Our experience includes automobile loans and leases, aircraft loans and leases, airline ticket receivables, renewable energy installation loans, assets, trade receivables and inventory, intellectual property, investment property, and tax liens. We also regularly represent investors in connection with investments in non-mortgage ABS as well as in connection with due diligence for private equity investments in specialty finance companies with securitization platforms.

Our lawyers have worked on a wide variety of transactions involving term and revolving assets, including structured warehouse facilities, ABCP conduits and medium term note programs, term securitizations, and revolving structures. We have significant experience in consumer financial assets such as agency and non-agency mortgage loans, renewable energy installation loans, home equity loans, home appreciation products, automobile loans and leases, credit card, receivables, and student loans.

We also have significant experience in non-consumer ABS, such as project finance loans, commercial loans, franchise loans, aircraft loans and leases, airline ticket and cargo receivables, non-aviation equipment leases, export receivables, and intellectual property. We also have experience in the securitization of non-performing assets, including non-performing loans, real estate tax liens and personal tax liens.

We also have experience in the securitization and warehousing of esoteric or emerging assets, including renewable energy installation loans, U.S. Small Business Administration loans, life settlement policies and reinsurance risks.

Commercial Real Estate Securitization 

We regularly represent originators, servicers, special servicers, trustees, rating agencies, investors and others in connection with securitizations of commercial mortgage loan portfolios and single large loans, and in restructurings of securitized mortgage loans and B-piece investments. We are also active in securitization of multi-tenant and credit-tenant commercial mortgage loans and real estate investment trusts securities. This experience gives us unique insight into some of the documentation issues which have come to light as a result of the financial crisis. In relation to new origination, we have been involved in a number of CMBS 3.0 transactions, credit tenant lease securitizations, and operating company and property company deal structures. We have experience in a wide range of commercial mortgage-backed security (CMBS) and commercial real estate (CRE) collateralized loan obligation (CLO) transactions throughout the capital structure and across the deal life span. We advise:

  • Lenders and borrowers on loans originated for securitization
  • Servicers for CMBS and CRE CLO transactions in relation to general servicing issues, transfers, asset management, loan assumptions, modifications and defeasances, including real estate mortgage investment conduits (REMIC), effectively connected income, and other tax implications.
  • Arrangers and underwriters in structuring CMBS deals, including real estate due diligence and swap advisory work.
  • Trustees, corporate service providers, investors, and rating agencies at all stages of the life cycle of a transaction, including restructurings, defaults, enforcement, and litigation.
  • Investors and others in third-party risk retention arrangements for CMBS transactions.
Residential Mortgage-Backed Securities  (RMBS)

We regularly represent underwriters in offerings of residential mortgage-backed securities guaranteed by Fannie Mae, Freddie Mac, and Ginnie Mae as well as issuers and others in private label RMBS transactions in the United States. We have also worked on covered bond transactions in the United States and Europe. We advise investors on a variety of issues involving interpretation of pooling and servicing agreements and disputes over put-back rights. We have also represented clients in litigation and enforcement matters involving RMBS transactions.

We advise servicers and special servicers for RMBS transactions in relation to general servicing and consumer regulatory issues, transfers, asset management as well as loan assumptions and modifications, including REMIC and other tax implications.

Our experience spans the range of disciplines essential to residential mortgage securitization, including tax, corporate, securities, derivatives, real estate, ERISA, and Investment Company Act practices. We are also familiar with the issues that property assessed clean energy programs pose for securitization structures.

Collateralized Loan Obligations 

We regularly represent arrangers, collateral managers, trustees, and other transaction participants in CLO transactions in both the United States and in European markets. We have experience in cash and synthetic CLOs, including cash-flow, market value, and balance sheet CLOs involving corporate, emerging market, and real estate loans, as well as single-tranche and full capital structure synthetic transactions.

We have been active participants in the post-crisis re-emergence of the CLO market with “CLO 2.0” and later “CLO 3.0.” We have advised on the evolving regulation of CLO requirements under risk retention rules of several jurisdictions as well as the Volcker Rule in the United States.

Our CLO transaction experience includes structuring CLO offerings designed to comply with the European Union’s evolving risk retention requirements, handling the first emerging-market assets CLO after the end of the financial crisis, and advising on the first transactions to include LIBOR-replacement mechanics and senior-note-repricing provisions. We have also been at the forefront of developing unique loan warehousing structures, including those with total return swaps, facilities, senior and subordinated participations, and secured loans.

We have also advised our litigation and enforcement lawyers in matters involving pre-crisis collateralized debt obligation (CDO) transactions.

We have broad experience in representing collateral managers, investors, and sponsors in collateralized debt obligations, including market value and cash flow CDOs and fully funded hybrid and synthetic CDOs. We have experience in the full range of issues that are relevant to investors and managers of CDOs, including credit risk retention, tax, commodities regulation, and investment advisor regulation, both in the United States and the United Kingdom.

We have also advised clients in litigation and regulatory enforcement actions involving CDOs. Owing to the predominance of mortgage assets in CDO and CLO transactions, the lawyers in our structured finance group rely heavily on the experience of our mortgage banking and consumer finance group for the analysis of legal and regulatory issues particular to mortgage assets.

We also have extensive experience in the use of derivatives in CDOs and other funds. Our partners have spoken and written about the use of derivatives in securitization and about the documentation of synthetic ABS.

Synthetic Structures, Derivatives, and Repos

Derivatives are an important feature of our securitization and structured finance group. We routinely work with swaps and other derivatives used as hedges for assets or transactions. We have experience with synthetic risk transfers using total return swaps and credit default swaps. We also understand the documentation, insolvency issues, and regulatory considerations in swap transactions in relation to securitization and structured finance transactions. We actively advise clients on swap regulatory developments under the Dodd-Frank Act and over-the-counter derivatives regulation under European Market Infrastructure Regulation (EMIR) and Basel requirements that impact synthetic risk transfers.

Restructurings, Distressed Situations, and Regulatory Investigations

We track developments affecting the swap documentation, including new protocols, annexes and definitions. In order to keep clients informed of such developments, we send regular e-alerts summarizing key cases, legislative and regulatory initiatives, and other developments.

Our derivatives lawyers work in tandem with our public policy and enforcement attorneys to track implementation of the Dodd–Frank Wall Street Reform and Consumer Protection Act and corresponding European Union regulations, or EMIR. They also actively monitor Australian developments concerning derivative reporting and clearing. Our multi-disciplinary team provides practical advice to clients that are currently active in OTC derivative markets with respect to Dodd-Frank and EMIR requirements, including technical compliance issues and opportunities to affect its implementation.

Islamic Securitization and Capital Markets Transactions 

We have an Islamic securitization capacity in our Middle East and London offices. Our partners have advised on the structuring and execution of sukuk transactions and multi-funding platforms using Islamic compliant structures including ijara, musharaka and murabaha. We also advise on sukuk defaults and restructurings. We have strong capability in related areas of Islamic financing including hedging under the International Swaps and Derivatives Association and the International Islamic Financial Market Tahawwut (Hedging) Master Agreement.

Emerging and Unconventional Assets 

We have experience in securitization and monetization of a wide range of off-the-run assets, including interest-only strips of SBA loans, renewable energy receivables, cryptocurrencies, municipal tax liens, and public authority financing in the United States and the United Kingdom. For example, the firm has been an active participation in the Solar Access to Capital working group sponsored by the United States Department of Energy’s National Renewable Energy Laboratory to enable securitization of loans and leases backed by solar photovoltaic arrays and associated cash flows.

Members of our team have advised on securitizations in emerging markets as well as Shari’a compliant capital markets issuances such as sukuk transactions.

Additional Thought Leadership Pages

Played a key role advising the senior tranche lenders and structuring agent in the Airline Economics 2020 “Overall Deal of the Year,” which involved the use of CLO technology to finance a US$3.6 billion portfolio of commercial aircraft loans.

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