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Recent Trends In Structuring Risk Retention Vehicles

Law360 (February 14, 2018, 1:40 PM EST) -- In the wake of the 2007-2008 global financial crisis, the United States and Europe enacted “risk retention” rules that require sponsors of securitization vehicles to maintain a financial interest in those vehicles (i.e., “skin in the game”).[1] Historically, collateral managers of collateralized loan obligation issuers (CLOs) have not had sufficient capital on hand to acquire significant interests in the CLOs they have managed.[2] Accordingly, to comply with the risk retention rules as CLO “sponsors,” collateral managers often have relied on significant funding from third-party investors by...
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