Feature

Is honesty the only excuse? Restraint of non-fraudulent demands under performance bonds

In this article Sanjay Patel considers the legal differences between restraining a bank from paying, and restraining a beneficiary from making a demand, under a performance bond.

Why intermediated securities should be brought within scope of the expanded Dormant Assets legislation

In this article the authors set out an overview of the proposed expansion of the Dormant Bank and Building Society Accounts Act 2008 and a critical examination of the possible reasons for leaving intermediated securities out. They argue that bringing intermediated securities within scope of the legislation would reflect the operational reality of how UK public securities are held, maximise the legislation’s impact, and could generally be done without too much conceptual difficulty.

Passing regulatory headwinds for a flourishing European CLO market

2020 was a relatively slow year for what had been a booming CLO market, with the initial stages of the pandemic resulting in a short-term dip in perceived corporate debt value and a reluctance of investors to deploy capital ahead of the implementation of state-led recovery packages. 2021 has been starkly different, with issuance volumes in the European CLO market set to potentially match or exceed those achieved in 2018 and 2019.¹ Whilst the market flourishes, behind the scenes market participants have had to grapple with an ever-evolving regulatory environment. In particular, sell-side market participants must determine how to adapt and evolve to achieve the best overall results for their investors across the capital structure, many of whom are placing increased emphasis on more sustainable investment strategies. A few of the key current topics are considered herein.

Central Bank Digital Currencies

Digitalisation has reached the shores of central banking. Central Bank Digital Currencies (CBDCs) are the public response to privately issued virtual currencies, of which Bitcoin was the pioneer. In this uncharted territory, central banks face a multitude of design choices – “account-based” or “token-based”, offered to the general public or only to a selected group of users – which raise unprecedented legal questions. Entering the digital arena bears great potential for monetary policy as well as risks for the financial system. Finding a balance for each jurisdiction and monetary system will be a key task for central banks in the 21st century.

Hacked crypto-accounts, the English tort of breach of confidence and localising financial loss under Rome II

In this article the authors consider Fetch.AI Ltd v Persons Unknown (15 July 2021, Unreported), an interim application made ex parte and heard in private, which demonstrates a concerning potential for divergence between the English and EU courts on the application of the Rome II Regulation.

Fund finance and sustainability: new guidance on the application of the SLLPs

Over recent years there has been significant growth and development in the fund finance industry, which has expanded over the last decade into a global market now worth more than US$600bn, according to the asset manager abrdn. As the market has continue to mature, the variety of tools available to investors (which include private equity, private credit and venture capital) to fund their operations has expanded considerably beyond the traditional subscription facility to encompass many more types of fund financing. One such innovation has been the introduction and adoption of sustainable finance, either by the way of use of proceeds facilities (green loans) or sustainability-linked loan facilities. 

In light of the increased use of ESG-linked financing in the fund finance market, on 5 March 2024 the Loan Market Association, Asia Pacific Loan Market Association, Loan Syndications and Trading Association and the Fund Finance Association published 'A Guide to the Application of the Sustainability Linked Loan Principles in Fund Finance' (Guide), which provides practical guidance to market participants on how the Sustainability Linked Loan Principles can be used the fund finance market, as well as identifying and addressing challenges and considerations  particular to fund finance transactions. 

In this article we will examine the use of sustainability-linked financing in the fund finance market and consider some of the issues raised by the Guide. 

Pitfalls with board resolutions authorising loan facilities

Directors sometimes express doubt as to what role a company’s board should play, once authority to negotiate and enter into a loan facility has been delegated to one or more of their number. If new terms are offered or circumstances change, which alter the suitability of the proposed finance, what can, or should the remaining directors do? In turn, what should the appointed director(s) do? This article explores some of the issues and considers how some pitfalls might be avoided.

Delivering valid notices of assignment: s 136 in 2024

It is well established that emails satisfy a requirement for “writing” and are documents. It is also well known that many documents in writing need to be authenticated by the writer’s signature. There are now multiple mechanisms that allow for electronic signatures as a means of authentication of an electronic document. The use of email and other electronic communications to give notice to a debtor of the fact of a statutory assignment under s 136 of the Law of Property Act 1925 is also widespread. The question as to whether electronic notice of an assignment under s 136 is valid has still not been to the Court of Appeal. Case law is confused on the point. This article suggests once again the better view is that it should be valid and the contrary case law should not be followed.

Enhancing trust in ESG ratings: welcome moves to fix the ecosystem

In this article, we consider the encouraging progress being made in the introduction of voluntary and mandatory solutions to address identified shortcomings and promote greater consistency, reliability and trust in the market for ESG ratings.

Artificial intelligence in syndicated lending

Banks are technology companies subject to vertical (that is, industry-specific) regulation. The ABA Banking Journal reports that: “This region [North America], with a history of strong investment in banks’ technology foundations, will see IT spending grow to $100.4 billion by 2027…”. AI adoption and deployment forms part of this anticipated spend. Alongside AI, tokenisation of debt instruments will create a new model in syndicated loan markets. This article explores the current position on AI in syndicated lending.