Regulators may allow CLOs to refinance without penalty

摘要

US regulators are considering a compromise to help managers of CLO funds to refinance as they struggle to comply with new rules designed to limit risk-taking that were released last year. The SEC is considering allowing CLOs issued before December 24 2014 to refinance tranches after risk-retention rules take effect in December 2016 without having to hold 5% of the deal. The SEC has been discussing the risk-retention rules with the Loan Syndications & Trading Association since the start of the year. The rules, introduced in the Federal Register in December, require CLO managers to maintain a financial interest in their investment vehicles, or "skin in the game", of 5%, which few can afford. Other regulators including the Federal Reserve and the Office of the Comptroller of the Currency have also been consulted about the potential decision, which may be released soon in the form of a no-action letter, two of the sources said. The LSTA and SEC have been exchanging draft language for a potential no-action letter for about a month.