Managing complex transactions: what your corporate trustee should be doing
There are more than a few challenges involved in successfully completing a large, complex securitisation deal — especially on a tight timeframe. It takes the right resources, as well as a high degree of agility and teamwork on the part of the sponsor, funding party and their legal counsel — all of whom must rely on the corporate trustee and other counterparties throughout the process.
Whether you’re a law firm, finance party or a sponsor, understanding the traits of a reliable trustee will support the timely execution of a transaction.
At the top of the list of traits should be adequate resources and scale to handle large and complex transactions, according to Joshua Theodore, vice president of business development for U.S. Bank Global Corporate Trust. “This includes the right technology and an experienced team,” he says.
Responsive client service is also critical to getting deals done successfully and on time. This includes timely onboarding, a detailed understanding of investor reporting needs and fast document turnaround. “We have to be efficient with deal workstreams and be responsive,” says Theodore. “Trustees can do this by working cohesively with deal parties and sharing best practices from similar transactions.”
A trustee should offer efficient onboarding processes, including staying ahead of Know Your Customer (KYC) deadlines. “Transactions shouldn’t be delayed because KYC deadlines weren’t met,” says Theodore.
“If a deal is scheduled to close in two weeks, you need to know your trustee will finish KYC well before that deadline,” he adds. “Transactions can be fast-moving, so trustees should be flexible and responsive to turn comments on document review.”
The debt and loan markets in Europe can be more complex than in the U.S., magnifying the importance of choosing the right trustee. For example, when acting as security trustee, there are many jurisdictional issues to consider in Europe, so a trustee needs to stay knowledgeable on local market issues to be able to hold security.
“Navigating the debt and loan markets in the EU can be complex, so clients need a competent trustee to keep transactions moving forward,” says Theodore. “For example, some transactions in Europe require a licensed credit institution to act as security agent. This is something else to look for in a trustee if you’re doing business in Europe.”
It’s hard to overemphasize the benefits of working with a trustee that offers all the services needed. This includes not just trustee solutions but also the various agency functions and common depository capabilities.
"Having everything under one roof creates efficiencies in many areas, including document review and onboarding."
For example, through its European Global Corporate Trust team, U.S. Bank offers comprehensive trustee and agent solutions for loan and debt capital market transactions. A U.S. Bank team recently served as corporate trustee for a large asset manager to support the commercial real estate funding solutions on a complex multibillion-dollar transaction.
This was a multi-asset, multi-issuer and multi-currency deal that had to be completed within two weeks. The appointment of the Global Corporate Trust team was for a large repo funding securitization in which underlying commercial real estate loan assets were securitized through a multi-compartment structure.
Even though the transaction had a short lead time, it required the onboarding of multiple issuer vehicles and the opening of a variety of accounts to support the complex cash flows of the deal. A full suite of transaction roles also had to be provided at both a common and currency compartment-specific level.
Multiple teams must be engaged to support such a complex deal, including relationship management, onboarding, legal and analytics. Considerable resources are also required on the analytics side, as well as the need to work efficiently with the sponsor and funding party on the investor reporting requirements. The transaction timing was determined by a regulatory deadline, which created additional time pressure on all parties working on the deal.
Transaction roles assumed by U.S. Bank included:
“Our ability to provide the client with ‘all-hands-on-deck’ service was vital to the successful completion of this deal,” says Theodore.
Issuers, sponsors and law firms alike will find value in a corporate trustee with the resources, scale, expertise and responsiveness needed to complete complex deals within a short timeframe. Visit our European Trustee Solutions page to learn more about our global corporate trust services.