Ashurst-McKee alliance aids Nomura in momentous CDO

Ashurst-McKee alliance aids Nomura in momentous CDO” />Ashurst has introduced its new transatlantic alliance partner McKee Nelson to Nomura, allowing the pair to celebrate their referral relationship by completing the first ever cash arbitrage collaterallised debt obligation (CDO) offering for the bank.

The firms jointly advised Nomura, the arranger, in relation to H2 Finance which, for the first time, used repurchase agreements to source additional leverage.

As first revealed in The Lawyer last Monday (15 March), the alliance between Ashurst and McKee will focus on structured finance and will involve joint pitching and joint training with a view to starting a secondment programme.

The move signalled the end of Ashurst’s relationship with Fried Frank, to which it formerly referred structural finance work. Ashurst made the switch when Fried Frank partner Larry Isaacson, with whom Ashurst finance partner Erica Handling has historically worked closely, moved to McKee Nelson.

Isaacson, who led on the Nomura deal, said: “We were able to provide New York law advice to Ashurst. Collectively, we provided [Nomura] with more expertise than any one law firm can provide on any one transaction.”

“We’re not charging double; we’re charging in a way that’s commensurate to our expertise,” he added.

Ashurst and McKee have already worked together on a number of other structured finance deals, which they completed prior to announcing their alliance. The firms worked together on the issues for Avoco I and Jubilee III, which closed in September 2003 and January respectively.

More recently, the firms jointly advised Deutsche Bank on the Clarenville CDO, which closed last month.

Ashurst has an existing relationship with Nomura but this is the first deal the firm has closed for the Japanese bank’s securitisation desk.

Ashurst international finance partner Michael Smith led the team, advising on English law aspects of the H2 Finance deal. He said that his relationship with Christian Marx, who joined Nomura from Morgan Stanley around 18 months ago, helped Ashurst secure the instruction.

“This transaction sources super-senior debt from the repo market.
Repo finance can afford favourable leverage ratios, which ultimately result in enhancing the yield to the sub-ordinated class of note-holder,” commented Smith.

Wharton Asset Management Bermuda, which manages H2 Finance, was represented by Speechly Bircham partner Paul Kay.