Asset-Backed Alert Quotes Dasha Sobornova on EU CLO Regulations

For its article “CLO Issuers Surmount EU Disclosure Regs,” Asset-Backed Alert quoted Akin partner Dasha Sobornova. The article discusses compliance with the European Commission’s loan-by-loan disclosure requirements, contained in European securitization rules issued in October 2022, which has proven not to be an obstacle for issuers of U.S. structured products. Asset-Backed Alert writes that an interpretation that said EU investors could not participate in noncompliant deals from the U.S. had left U.S. issuers, particularly of collateralized loan obligations (CLO), “scrambling.”

The article notes that it is currently unclear how many U.S. managers plan to put outstanding CLOs held by EU investors in compliance. Dasha said that, to that end, it likely would make sense to wait until resetting a CLO becomes a viable option, viewed as a fresh deal from a regulatory perspective. This will mean that the reset will need to be structured as fully compliant, she noted.