Non-conventional financial instruments and structures have become an essential tool for corporate treasurers and others who are responsible for management of a company’s capital structure. New products and approaches are constantly being developed and presented. Bryan Cave’s Structured Products Team can provide assistance in analyzing and documenting these products, and in identifying the issues which need to be of particular concern to our clients.
Derivative products allow our clients to protect against risks and uncertainties of many different sorts. They also allow for speculation about future events and price movements, including leveraged speculation, when that is considered to be appropriate.
Over-the-counter derivative transactions are negotiated transactions, as opposed to trading of standard contracts on regulated futures exchanges. When our clients enter into OTC transactions, we are available to help ensure that the negotiated documentation for the transactions properly reflects the financial strategy which has been adopted, and to help prevent unpleasant surprises as the transactions are carried out.
The documentation most commonly used for derivatives transactions is the Master Agreement and the extensive related documentation published by the International Swaps and Derivatives Association. Attorneys in our Structured Products Team have many years of experience in dealing with this documentation. The ISDA documents, which have evolved over several decades, and which continue to evolve, are designed to offer a standardized set of transaction documents and related definitions. The ISDA documents, properly prepared, can do an excellent job of clearly defining the terms of swaps, derivatives, futures and other similar transactions. However, the language is dense, involves extensive cross referencing and utilizes defined terms whose meanings are not always apparent. As financial professionals are looking at the financial engineering represented by a transaction, it is essential that legal analysis be conducted of the related documentation.
When our clients are entering into derivatives transactions, they may be presented with a set of the counterparty’s standard documentation. Most of that documentation is standard and requires no change. However, there are key provisions which can and should be negotiated. Our role is to identify and assist in the negotiation of those provisions.
Transactions we have handled include swaps, caps, floors, collars (including cashless collars), calls, puts, options, and swaptions (options on swap transactions). Transactions such as these may relate to:
Our Structured Products Team regularly handles securitizations, or asset-backed-securities transactions, of many different types. The most common securitization transaction for our clients has been the issuance of securities backed by accounts receivable. We have also represented clients in connection with the securitization of inventory and other assets of various kinds, including a recent securitization of a client’s high value inventory located in multiple jurisdictions in North America, Europe and Asia.
Based on our experience in dealing with securitizations in many different market segments, and involving the principal financial intermediaries in this market, we are familiar with the key issues that affect the originator or owner of the assets involved in the securitization, the investors and the other transaction participants.