The Structured Transactions Group: 7,000 Deals and Counting

May 21, 2015

The structured transactions group at Morgan Lewis has advised on more than 7,000 deals with a combined value of over $3 trillion since its inception in 2002.

It has represented more issuers and underwriters, combined, in offerings of ABS/MBS than any other law firm in the US in the past five years, according to Asset-Backed Alert and Thomson Financial. And it has earned sustained industry recognition, including a nationwide Band 1 ranking in Chambers USA for Capital Markets: Securitization.

Clients look to the team for creative solutions for a broad range of financing needs, such as CLOs, mortgage finance, esoteric assets, acquisitions, and sophisticated structured transactions. And the group continues to execute industry firsts. Last year, it represented the arranger in the first-ever revolving structure used in an auto transaction. It was also involved in both the first unrated and the first rated Rule 144A securitization note offerings of small-ticket consumer loans, which were originated online through peer-to-peer lending platforms (now called marketplace lending).

We caught up with partners John Arnholz, Reed Auerbach and Jeff Johnson to discuss the latest industry developments, including the current regulatory regime stemming from the Dodd-Frank requirements.

What topics are currently keeping your clients up at night?
Clients are focused on understanding the many new Dodd-Frank requirements and developing and implementing compliance strategies. The industry is facing a brand new regulatory landscape, but new rules requiring sponsors of securitizations to retain a specified level of exposure to the deals has issuers' and underwriters' full attention; we are giving clients guidance through our blog devoted to Reg AB II and other regulatory news. The changes will almost certainly affect structure and the economics of deals.

Where do you see the next big opportunities?
Many interesting new asset classes are being securitized but perhaps none is as promising as marketplace lending. 

For those who aren’t familiar with marketplace lending, how would you describe it?
Marketplace lending, which used to be known as peer-to-peer lending, involves a licensed entity serving as an online intermediary between individuals seeking funds for a variety of purposes and entities─now mostly institutional─willing to provide the funds to finance the loans.

Why is marketplace lending such a focus for institutional clients right now?
This has become a ‘hot’ area of securitization as interest rates charged on such loans provide the potential for very attractive yields to investors. Several large institutions and hedge funds have begun entering into specific arrangements with loan platform operators to provide them with pools of such marketplace lending loans, with the goal of eventually securitizing such portfolios. Our clients span the spectrum─hedge funds, investment banks, and now we are doing work for platform operators.