Financial Regulatory Forum

U.S. credit market remains uneasy in the world of representations and warranties

US dollar note and other currenciesBy Alex Lee

NEW YORK, Oct. 12 (Business Law Currents) - The first half of 2011 saw rebounding credit markets and an uptick in debt issuance. Due to uncertain economic conditions in the second half of 2011, however, even the most fundamental aspects of loan documentation are facing increasing scrutiny. Representations & warranties that were more routine and non-contentious transformed into significantly stricter provisions as a result of the credit crisis.

Gun shy lenders began placing more onerous terms in credit facilities and the reps and warranties were dramatically bulked up. Some borrowers are now required to announce their credit worthiness under no uncertain terms. Recent litigation concentrating on reps and warranties has heightened the already palpable sense of market unease. Lenders are escalating the investigative function of the reps & warranties to more fully flesh out the factual matrix in reliance of which they will decide to provide a credit facility. (more…)

Japan central bank delays credit-market exit after government pressure

Japan's Finance Minister Hirohisa Fujii speaks during a news conference in Tokyo October 14, 2009. Japan's economy may be in a more severe condition than the Bank of Japan thinks, Fujii said on Wednesday, though adding that the central bank's decision to keep monetary policy on hold was appropriate. REUTERS/Yuriko Nakao (JAPAN POLITICS BUSINESS EMPLOYMENT) By Hideyuki Sano
TOKYO, Oct 14 (Reuters) – The Bank of Japan deferred a decision on Wednesday on withdrawing support for corporate finance after the government pressed the central bank to consider the economic cost of its retreat from credit markets.


COLUMN – UK rulings narrows “accepted practice” loophole for traders

– John Kemp is a Reuters columnist. The views expressed are his own –
By John Kemp
LONDON, Oct 12 (Reuters) – The UK Financial Services Authority (FSA)’s decision to censure two Dresdner Kleinwort traders for trading while in possession of inside information about a forthcoming issue of floating rate notes by Barclays has implications that go far beyond the offence of trading ahead of a formal announcement.
By censuring the traders, the FSA is attempting to establish a precedent about how it will deal with the defence of “accepted market practice” in future, restricting it significantly, in a move that will force a wider re-examination of entrenched practices across the financial markets in London.


Bank of England to launch commercial paper facility Aug. 3

LONDON, July 30 (Reuters) – The Bank of England said on Thursday it would launch its Secured Commercial Paper Facility on Aug. 3 to improve the functioning of corporate credit markets.