Press Releases

LMA responds to IOSCO Consultation Report on Good Practices for Leveraged Loans and CLOs

The LMA has responded today to IOSCO’s Consultation Report on Good Practices for Leveraged Loans and CLOs.

IOSCO has been monitoring growth in the leveraged loan and CLO markets. The IOSCO consultation paper released on 14 September 2023 sought feedback on a set of proposed good practices to address concerns including transparency, complexity of documentation and alignment of interest from loan origination to loan buyers.

The LMA has welcomed the report, offering as it does for consideration a set of good practices for market participants. To assist IOSCO in its understanding of the market and outline the way forward, the LMA has made the following key points:

• Loans are not securities and should not be subject to regulation modelled on the securities markets.
• Participants in the leveraged loan market and CLO markets are sophisticated lenders and are comfortable with negotiating terms to suit their commercial interests.
• Any good practices should reflect the current role of arrangers and underwriters and should not impose inappropriate obligations on them.
• Any good practices should also reflect the role of the sponsors, as they drive many of the deliverables and outcomes.
• The CLO market is already regulated with disclosure requirements and alignment of interests through risk retention requirements.

To inform its response, the LMA consulted with its membership, which comprises 851 organisations across the EMEA loan markets. As the authoritative voice of the syndicated loan market in EMEA, the LMA represents its members in engaging key stakeholders across the market. The LMA looks forward to continuing its dialogue with IOSCO as it progresses this important initiative.

Nicholas Voisey, Managing Director – LMA, said

“IOSCO has noted some areas the market could make better and the LMA will look to work with its members to explore how these can be progressed.”

“The LMA supports and encourages development of good practices regarding timely delivery of information and the level of detail and transparency to be provided, particularly around EBITDA definitions, term sheet disclosure, transferability, and time to review documentation”.