Leveraged Lending and Collateralized Loan Obligation Markets

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Course Features

  • Course Code: 116
  • Certificate: Yes
  • CPE Credits: 14
  • Level: Intermediate
  • Prerequisites: None
  • Method: Live & Virtual
  • Venue: MicroTek
  • Time: 9:00 am – 5:00 pm
  • Registration: 8:30 am
  • Dress Code: Business Casual
  • Category:
  • Course Duration: 2 Day
  • Available Course date: 08/12/2019

Leveraged Lending and Collateralized Loan Obligation Markets

Leveraged loans are over $1.2 trillion dollars and collateralized loan obligations represent over 50% of all asset backed securities. The fact that over 80% of leveraged loans are covenant-lite has attracted great interest from regulators, rating agencies, and legislators in Washington. This course covers the mechanics and risks of these products.

 

At the end of this course, participants should be able to:                                         

  •  Define and identify mechanics of leveraged loans
  • Discuss covenants typical in lending
  • Evaluate bank regulatory guidance on leveraged lending and how it is applied
  • Describe mechanics of collateralized loan obligations
  • Debate advantages and risks to leveraged lending and CLO markets
  • Identify relevant bank and financial regulators in leveraged lending and CLO markets
  • Compare and contrast the growing role of non-banks in leveraged lending and CLO markets

 

Module I        Leveraged Loans 

  • Describe a leveraged loan and its purpose
  • Define leverage
  • Compare and contrast different companies that take out leveraged loans
    • Uses of loans
  • Discuss bank and non-bank originations
    • US, European and other geographic areas
  • Enumerate covenants that can accompany leveraged loans
  • Describe ratios that need to be analyzed and monitored to determine quality of loans

  

Module II       Mechanics of Collateralized Loan Obligations 

  • Describe mechanics for special purpose vehicles and pooling of loans
  • Explain the phases of the lifecycle of a CLO
  • Enumerate and describe different tests in CLOs
    • Over Collateralization, Interest Coverage, Weighted Average Life, Weighted Average Spread,
  • Describe the role of warehouse facilities
  • Compare and contrast CLOs before and post-financial crisis

 

Module III     Size of and Actors Participating in CLO Market

  •  Describe the size of the CLO market by geography and investor types
  • Discuss CLO market as percent of Asset Backed Securitizations (ABS)
  • Enumerate biggest bank and non-bank actors in CLO market in
    • The US
    • Europe
    • Asia
    • Rest of the world

 

ModuleIV      Regulations and Guidance Governing Leveraged Lending and CLOs

  •  Discuss the role of the Financial Stability Board and the Basel Committee on Banking Supervision in these markets
  • Highlight U.S. regulations and guidance that influences leveraged lending structuring
  • Discuss how risk retention impacts CLO investments and trading
  • Describe influence of Volcker Rule on CLOs
  • Discuss recently proposed House bills for the role of the Office of Financial Research and Federal Financial Institutions Examination Council

 

Instructor

  • Mayra Rodríguez Valladares is Managing Principal of MRV Associates.  She specializes in training and consulting solutions for Basel III, Dodd-Frank, risk management, financial derivatives, capital markets, foreign exchange, and corporate finance.  She has worked with private sector and foreign central banks in the US, UK, Latin America Eastern Europe, Central and Southeast Asia, and Africa, …
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