Magic circle partners gathered in New York late last week for a summit on the crisis in the US and European syndicated loan market.
The Loan Market Association’s (LMA) conference on Thursday (2 May) brought together UK partners from Allen & Overy, Clifford Chance and Linklaters as well as investment bankers to discuss challenges in the syndicated loan market and the impact of market volatility.
Since the collapse of the US sub-prime market last summer, big ticket private equity deals have dwindled, leaving the syndicated loan market in disarray.
Clifford Chance global head of restructuring and insolvency, Mark Hyde, said: “The markets are certainly beginning to pick up in the UK and we have not yet seen any significant restructurings.”
While the US has experienced a shift in the market creating a rise in litigation, such as an increase in disputes in the collateralised debt obligation (CDO) market, the UK has yet to see a clear shift in this direction.
Linklaters global head of restructuring, Tony Bugg, explained that UK restructuring has been shaped by a number of recent trends such as covenant-lite and the impact of the UK pension regulator.
Bugg said: “Significant restructuring in the UK will look very different now. If you look at the Polestar restructuring we see the pension trustees playing a major role. The role of the pensions regulator that means that the dynamic has changed and sponsors will no longer be in such a position of dominance.”