Managing complex transactions: what your corporate trustee should be doing

August 22, 2023

When it comes to managing the complexities of large, multi-issuer transactions, finding a partner that offers comprehensive corporate trustee services is critical.

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.”

Corporate trustees that navigate complexities in Europe

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.”

The importance of comprehensive corporate trustee services

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."

Joshua Theodore

Case in point: supporting a complex CRE repo securitization under tight timelines

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:

  • Note trustee
  • Security trustee
  • Account bank
  • Cash manager
  • Calculation agent
  • Paying agent
  • Registrar
  • Common depository
  • Custodian

“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.

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Disclosures

U.S. Bank Global Corporate Trust is a trading name of U.S. Bank Global Corporate Trust Limited, U.S. Bank Trustees Limited and Elavon Financial Services DAC (each a U.S. Bancorp group company). U.S. Bank Global Corporate Trust Limited is a limited company registered in England and Wales having the registration number 05521133 and a registered address of 125 Old Broad Street, Fifth Floor, London, EC2N 1AR. U.S. Bank Global Corporate Trust Limited, Dublin Branch is registered in Ireland with the Companies Registration Office under Reg. No. 909340 with its registered office at Block F1, Cherrywood Business Park, Cherrywood, Dublin 18, Ireland D18 W2X7. U.S. Bank Trustees Limited is a limited company registered in England and Wales having the registration number 02379632 and a registered address of 125 Old Broad Street, Fifth Floor, London, EC2N 1AR. Elavon Financial Services DAC (a U.S. Bancorp Company), trading as U.S. Bank Global Corporate Trust, is regulated by the Central Bank of Ireland. Registered in Ireland with the Companies Registration Office, Reg. No. 418442. The liability of the member is limited. Registered Office: Block F1, Cherrywood Business Park, Cherrywood, Dublin 18, Ireland D18 W2X7. Directors: A list of names and personal details of every director of the company is available for inspection to the public at the company’s registered office for a nominal fee. In the UK, Elavon Financial Services DAC trades as U.S. Bank Global Corporate Trust through its UK Branch from its establishment at 125 Old Broad Street, Fifth Floor, London, EC2N 1AR (registered with the Registrar of Companies for England and Wales under Registration No. BR020005). Authorised and regulated by the Central Bank of Ireland. Authorised by the Prudential Regulation Authority and with deemed variation of permission. Subject to regulation by the Financial Conduct Authority and limited regulation by the Prudential Regulation Authority. Details of the Temporary Permissions Regime, which allows EEA-based firms to operate in the UK for a limited period while seeking full authorisation, are available on the Financial Conduct Authority’s website.

All banking services are provided through Elavon Financial Services DAC. U.S. Bank Global Corporate Trust Limited and U.S. Bank Trustees Limited are Trust Corporations and not banking institutions and are not authorised to carry on banking business in the United Kingdom, Ireland or any other jurisdiction.

U.S. Bank National Association is not responsible for and does not guarantee the products, services, performance or obligations of its affiliates.