The London, Frankfurt and Milan offices of Clifford Chance have advised Bayerische Hypo- und Vereinsbank AG (HVB) as Lead Manager on a EUR 6.2 billion partially funded synthetic CLO of large corporate loans of HVB, Unicredit Banca d’Impresa and Bank Austria Creditanstalt AG.
This is the first synthetic CLO to combine successfully the loan portfolios of three separate banks in a single deal.
The portfolio is divided into three sub-portfolios. EuroConnect Issuer LC 2007-1 Limited, an Irish special purpose vehicle, was established to sell credit protection on those sub-portfolios to each of the originators, which it funded by the issue of various classes of credit linked notes rated by Standard & Poor’s, Moody’s and Fitch.
The transaction was structured as balance sheet CLO under Basel II. A ground-breaking feature of the transaction was the fact that both investors in the notes and the unfunded credit protection provider gained exposure to the diversified risk represented by the combined portfolio of loans originated by the three originators. This diversification of the transaction also enabled the originators to take advantage of synergies which would not have been available had the deal involved three standalone transactions.
Kirti Vasu and Kerstin Schaepersmann (Frankfurt), Claude Brown and Timothy Cleary (London), Michele Crisostomo and Tanja Svetina (Milan) were primarily responsible for structuring and implementing the transaction for HVB as Lead Manager, while Schönherr Rechtsanwälte, Vienna advised on Austrian law and the Rome office (Anna Bessant) acted for the Trustee.
