Debt Fund Repacks Q1 2023

Debt Fund Repacks in Q1 2023

Peak global interest interest rates presage demand to repackage debt products as stakeholders rebalance risk / return payoffs.

What is a debt fund repack?

A repack is simply a transfer of risk to a new round of investors that seek to gain exposure to a pool of loans.

A new SPV is typically established to issue notes to investors. Cash raised is used to acquire the underlying debt securities or loans.

New financial products

Repacks can be complex and involve onshore and offshore jurisdictions as well as various parties including the debt fund, note issuer (ie the borrower) and note purchaser (ie investor).

New investors pay up front to gain exposure to a variable interest / principal amortization payment that is linked to the performance of the underlying credit fund.

Facility Agent and Security Trustee’s Role

As the Facility Agent and Security Trustee we sit between stakeholders to ensure the transaction proceeds in accordance with the finance docs.

As Facility Agent we facilitate repacks by:

1. Tracking various currencies and interest rate benchmarks;
2. Using our tech to track any default in payment;
3. Supporting rate amendments and additional borrowings;
4. Facilitating reporting to Lender and Borrower;
5. Reviewing and facilitating Lender trade activity;
6. Tracking information undertakings; and
7. Facilitating amendments and waiver communications.

As?Security Trustee?we also:

1. Retain and share large volumes of deal documents;
2. Track loan covenants;
3. Send a variety of Swift messages to facilitate the release of security; and
4. Apply robust KYC procedures to keep track of beneficiaries and ongoing responsibilities.

Our expert APAC debt capital markets team can facilitate complex repacks, including structured fund linked products, total return swaps etc. Reach out for a demonstration of our leading tech enabled DCM solutions.

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