Course overview
With the financial world currently undergoing significant changes, one of the most important challenges in banking is to reinforce the restructuring function and refresh leveraged loan techniques given the return
of the leveraged loan market. 'Distressed Debt and Syndicated Loan Market' enables you to ensure that your staff – whether bankers, lawyers or investment professionals – have the tools to cope with the new environment.
Summary of course content
- Thorough understanding of the leveraged loan market
- Syndication of leveraged loans
- Pricing a leveraged loan
- Building a leveraged loan business as a participant
- The evolution of the restructuring and distressed debt market
- The principal elements of debt restructurings.
- Examining the changes in restructuring practices, including the latest European techniques
- Examining key legal issues and current documentation
- Identifying strategies for all debt restructuring participants
- Building an effective restructuring solution
- An alternative exit route – secondary trading of distressed debt
Methodology
The course will be structured around lectures and recent reallife case studies. Delegates will enhance their studies though role plays, group discussions and team presentations.
Who should attend this training course?
- Bankers
- Relationship managers
- Credit analysts
- Loan agency
- Distressed investors
- Institutional investors
- Portfolio managers
- Asset managers
- Loan traders
- Financial advisors
- Lawyers
- Middle office
- Internal Auditors
Supporting publication:
Day 1: The leveraged loan market
Overview of market definitions, statistics and transaction timetable
- Definition and characteristics of a syndicated leveraged loan
- Common structures, uses and key defining terminology
- Transaction timetable
Overview of documentation
- Loan Market Association (LMA) and others (e.g. LSTA)
- Investment grade and leveraged primary documentation
- The documentation cycle
Mandate and term sheet
- This session will examine the mandate letters and term sheets with discussion on key clauses highlighting the commercial significance for borrowers and lenders
- Types of facilities common to leveraged loans
- Mandate letters
- Confidentiality and NFR letter
- Term sheet
Case study: Mandate for HiLevPac
Practicalities
- Role of agent
- Role of MLA / arranger
- Role of and rights of participating banks
- Building a business as a participant bank
Case study: Assessment of the merits of an invitation to participate
Pricing a leveraged loan
- Sources of information
- Trade-offs between price, maturity and credit structure
- Assessing market appetite
- Underwriting and distribution strategies
- Sub-underwriting
- Syndication
- Club
- Secondary
Syndicating and closing a leveraged loan
- Investor materials - PIM, due diligence reports, bank meeting
- Data room
- Timetable
- Private vs. public
- Allocation
- Free to trade
Case study: HiLevPac at the close
Day 2: Distressed debt in leverage land
- problems and the solutions
Overview and historical perspective on distressed debt and restructurings
- History and development of the market
- Major market players and their roles
Debt structures
- Leveraged vs. non-leveraged structures
- Long term vs. short term solutions - haircut or sticking plaster?
- Cram downs
- Due diligence
- Multiple jurisdictions
What causes default? The key problems
- Over-reliance
- Borrowing short
- Over-leverage
- Volatility and Black Swans
- Complacency
Case study: HiLevPac in distress
Overview of the agent and the London approach
- Role of the agent bank
- The ‘London Approach’ in action
- The Asian variation
- INSOL principles
- Development
Standstill arrangements key principles and structures
- Requirements for successful appointments
- The role and duties of the steering and coordinating committee
- Appointment letters
- The practicalities
Case study: FECSA
Recent defaults and restructurings - the 2009/10 experience
- Background
- Early warning signs
- Legal position
- Creditor dynamics
- The restructuring process
Workshop: Delegates will work in small groups analysing recent restructurings
Day 3: Exit routes from distressed debt
- restructuring or secondary trading?
The importance of valuation and the Independent Business Review / accountants’ report
- Content of the Independent Business Review
- Going concern or liquidation?
- Techniques
- How to find the level of ‘sustainable’ debt
Restructuring solutions for distressed leveraged loans
- Write-offs
- New money
- Disposals
- Corporate restructurings and turn-arounds
- Risk / reward
Case study: HiLevPac in the secondary market
Secondary loan trading of distressed debt
- Development of the market
- Key drivers
- Main players
- Settlement
- Market practice
LMA Par and distressed documents
- Latest documents
- Key changes
- Legal issues
Which route to take to exit: restructuring or secondary sale?
Workshop: Trade confirmation
Course summary and close
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Michael Constant
Michael Constant is a former vice chairman of the loan market association and was previously head of syndicate at Natixis and managing director of loan syndication at JPMorgan Chase. He has worked in banking for 35 years and has had two main roles during his career – syndicated loans and project finance. He has recruited, developed and led teams in Asia, the Middle East and Europe as well as working in North America and Africa. He has focused on all types of complex, structured financings and has been involved in several restructurings including co-chairing the FECSA steering committee.
Courses run by this instructor
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This course has now expired please email us to find out when the course will next be running.