A&O acts for RBS on Trafford CMB issuance

Allen & Overy (A&O) advised arranger Royal Bank of Scotland (RBS) on a tranche of commercial mortgage-backed notes (CMBs) issued by Trafford Centre Finance.

The deal represents the company’s first tap issue since its original securitisation in 2000. A&O won the mandate to act for Trafford because the magic circle firm advised the company on its original 2000 issue, the first CMBs by a shopping centre.

The CMBs are unusual in that this latest tranche included the issuance of reserve notes. The reserve notes allow the issuer to hold some of the notes ‘in treasury’ to sell at a later date. Reserve notes are rated from day one, but are held by the issuer and do not bear any interest until they are released back into the market.

A&O securitisation partner Christian Lambie, who lead the team advising RBS, said: “There were accounting and legal challenges that needed to be overcome in order for the notes to be recognised as debt, which involved working with the UK Listing Authority.

“The notes serve as a tap within tap and are a more efficient way of raising debt than to come to the market twice.”

Peel Acquisitions Group, the owner of Trafford, was advised by Travers Smith.