2022 has been a remarkable year for the banking industry. Yields on interest earning assets stayed well ahead of funding costs to drive record gains in net interest margins. The lift from higher rates, combined with broad based loan growth, translated to record net income. For 2023, we expect consistent credit availability from bank lenders as fund finance becomes a net beneficiary of sagging loan demand and tightening credit conditions in other lending markets.
As remarkable as the year has been for banks, 2022 will be remembered in part for the continued ascent of private credit. The scale and significance of these non-bank lenders became clear this summer when private credit funds stepped in to close a number of multi-billion unitranche loans as banks retreated from the leveraged loan market.
We have been following a case that has been winding its way through New York federal courts for some time that players in the syndicated loan market have described as everything from “a potential game changer” to an “existential threat” to the syndicated loan market. The case in question is Kirschner v. JPMorgan Chase Bank, N.A., which is before the United States Court of Appeals for the Second Circuit.
Scott Aleali and Jeff Maier posted a Fund Fanatics highlight reel of their 2022 interviews and are now looking for some engaging guests and topics for 2023. Contact Scott and Jeff with any suggestions and any comments.
The Deloitte Private Debt Deal Tracker Autumn 2022 includes an article from Director Jamie Mehmood titled “The Evolution of NAV Financing against the Current Market Outlook.” To access the Tracker and Article, click here.
The Cayman Islands has long been a leading investment funds jurisdiction, and the North American fund finance industry is relatively familiar with the key legal concepts arising on a fund financing involving Cayman Islands private equity and other alternative funds. The Cayman Islands is internationally recognized as a well-established, modern, transparent, commercial and flexible common law jurisdiction. Luxembourg is the largest fund domicile jurisdiction in Europe and, over the past years, has become a key player in the fund finance industry. In this article, we explore the background and evolution of Luxembourg as a jurisdiction, how it compares with the Cayman Islands, the essential Luxembourg fund finance points, and how to get the best of both worlds.
We continue our alphabetical 50-state survey of sovereign immunity with our third installment in the series. Today we have something for everyone (tropical beaches, rugged mountains, big cities and wide-open spaces): Hawaii, Idaho, Illinois, Indiana and Iowa!
On Tuesday night, Women in Fund Finance hosted a pre-holiday networking event in New York at the Metropolitan Club. The event was sponsored and hosted by TriState Capital Bank, one of the newest sponsors of Women in Fund Finance. The event brought bankers, attorneys and fund sponsors together for an evening of cocktails and conversation.
Collateralized Fund Obligations (CFOs) are securities that create leveraged exposure to portfolios of fund investments through the issuance of an equity tranche and one or more debt tranches. Although CFOs have been around since the early 2000s, the product has recently received renewed interest from private equity sponsors and investors as a potential fund financing solution. The Financial Times, in a recent article, discussed CFOs, noting certain sponsors that have recently issued CFOs and mentioning interest in the product from insurance companies and public pension plans.
A recent article in Private Funds CFO, titled “Lenders get cautious on ESG-linked lines, but issuance remains resilient,” addressed some market developments involving ESG-linked subscription credit lines, including comments from Cadwalader’s Wes Misson. The subscription-required article is here.