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Course Details

Course Information
  • smart_display Format

    On-Demand

  • signal_cellular_alt Difficulty Level

    Intermediate

  • work Practice Area

    Real Property - Finance

Date & Time
  • event Date

    Thursday, October 31, 2024

  • schedule Time

    1:00 p.m. ET./10:00 a.m. PT

  • timer Program Length

    90 minutes

Credit Information

  • This 90-minute webinar is eligible in most states for 1.5 CLE credits.

$347.00
CLE
ALL

This CLE course will discuss the various uses of swaps and other derivative products to hedge risk in real estate finance transactions, integrate derivatives into loan documentation, and document the swap transaction to ensure there is consistency with the loan.

Faculty

Chrys A. Carey
Of Counsel
Morrison Foerster

Mr. Carey represents clients in a wide variety of derivatives transactions and advises them on derivatives regulatory and compliance issues. His clients include investment companies, hedge funds, foreign and domestic banks, central banks, multilateral development banks and corporate end-users. Mr. Carey negotiates ISDA Master Agreements and other trading documents, including prime brokerage documents, clearing and execution agreements and related collateral arrangements. He also advises his clients on a broad array of derivatives regulatory issues arising under the Commodity Exchange Act and the rules and regulations of the Commodity Futures Trading Commission.

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Scott L. Diamond
Of Counsel
Ballard Spahr LLP

Mr. Diamond is a capital markets lawyer with decades of experience in financial services and as lead attorney in regulatory matters, transactions and litigations. He co-leads the firm's Derivatives, Structured Products, and Secondary Markets team. Mr. Diamond’s practice focuses on complex transactional matters involving derivatives and securities, compliance, swaps, foreign exchange, agricultural commodities, metals, digital assets and non-linear products. He represents institutions in tax-exempt and taxable secondary market structures and collateralization. His practice encompasses complex structured products such as tax-exempt energy prepay transactions, total return swaps as synthetic loans and guarantees, tender option bonds and matters involving swap dealers, broker-dealers, introducing brokers, derivatives transactions and regulation. Mr. Diamond also has deep understanding of the derivatives and securities clearing process as well as FINRA and NFA rules and the intersection of securities, derivatives and identified banking products. He is a former Head of Investment Banking - Legal for a large multinational bank and has a wealth of derivatives, securities and banking experience.

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Description

Borrowers and lenders commonly use swaps and other derivatives to hedge against the movement in market interest rates. The ISDA Master Agreement, Schedule, and a Confirmation establish the relationship between borrowers and swap providers and the economic and legal terms of the hedging transaction.

Loan and swap documentation must be aligned correctly to ensure that lenders and borrowers are in compliance with applicable laws and regulations, the loan collateral properly secures swap obligations (as applicable), there are no unintended economic effects on either side of the transaction, and the documentation adequately addresses the implementation of SOFR or other alternative rates, among other things. Loan counsel must ensure that loan documents sufficiently reflect and authorize the hedging transaction.

Counsel to swap parties must also understand the financial ramifications and regulatory framework of interest rate swaps to advise clients considering hedging transactions.

Listen as our authoritative panel of finance practitioners guides you through the use of swaps to hedge risk in real estate loan transactions and best practices for documenting both the swap transaction and the terms of the swap transaction in the loan documentation. The panel will also look at the impact of rising and falling rates on real estate borrowers, lenders, and swap market participants.

Outline

  1. Introduction to hedging interest rate risk
  2. Swap documentation overview
    1. ISDA master agreement
    2. Schedule to the ISDA master agreement
    3. Confirmation
    4. Credit support annex
    5. Dodd-Frank regulatory terms
  3. Coordinating loan documents with the ISDA Master Agreement
    1. Securing hedging obligations
    2. Termination rights
    3. Complying with anti-tying laws
    4. Other common documentation pitfalls
  4. Additional issues and considerations

Benefits

The panel will review these and other key issues:

  • Current market trends for using derivatives to hedge risk in real estate loan transactions
  • Best practices for integrating derivatives into loan documentation
  • Financial and regulatory ramifications regarding interest rate swaps