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Following the global financial crisis (GFC) and the sovereign debt crisis, the debt capital markets have seen major changes. A lack of trust and disclosure led to a surge in bondholder litigation, along with ongoing enforcement action from supervisors and regulators. Investors continue to explore all available avenues to recoup losses. More recently, structured products have made a comeback as investors hunt for yield or, alternatively, seek sustainable investments in the bond markets. The focus of this subject is distinctly practical. Real-life examples from international practice will be analysed and discussed. The lecturer draws on his international experience and brings in guest lecturers from top tier law firms and financial institutions, as well as other disciplines, contributing to a highly interactive, challenging, flexible and overall rewarding subject.
This subject covers the law and practice of the international debt capital markets. It discusses the mechanics of the capital markets generally, explaining how these differ from the loan and derivatives markets. It covers the relevant actors and the (highly dynamic) legal and regulatory framework. There is emphasis in class on the legal and structuring aspects of actual capital market transactions, such as covered bonds, securitisations, (structured) bonds and hybrid transactions.
Restructuring of bond transactions (as evident in the recent sovereign debt crises) is a prominent feature. Consideration of financial markets litigation (involving investment banks, hedge funds, ratings agencies, derivative dealers and regulators) is another important aspect of the subject. Green and inclusive finance (through green bonds, some project bonds and microfinance securitisation) also features. Actual transactions, their structure, term sheet and documentation, are discussed in class, in order to provide students with a skillset that is applicable in legal practice and thus further enhance their legal prospects and careers.
Intended learning outcomes
A student who has successfully completed this subject will:
- Have a sophisticated appreciation for the legal and commercial drivers for various debt capital market products
- Have developed a thorough and detailed understanding of structuring issues in these types of transactions
- Have an advanced understanding of and be able to demonstrate autonomy, expert judgment and responsibility in practice in applying the general legal issues involved in these transactions along with a working knowledge of key documentation issues and recognise and avoid common pitfalls in practice
- Have developed a sophisticated appreciation for the legal risks in structured finance transactions and have developed the cognitive and technical skills to mitigate these legal risks
- Have developed an advanced and integrated understanding of the (international and domestic) case law and laws and regulations relevant for (structured) finance transactions generally, and be able to critically examine, analyse, interpret and assess this case law and regulations.
Last updated: 3 November 2022