Source: https://www.law.cornell.edu/cfr/text/17/246.9
Timestamp: 2020-01-29 03:07:17
Document Index: 195546659

Matched Legal Cases: ['§ 246', '§ 246', '§ 246', '§ 246', '§ 246', '§ 246', '§ 246']

17 CFR § 246.9 - Open market CLOs. | CFR | US Law | LII / Legal Information Institute
Section 246.9. Open market CLOs.
17 CFR § 246.9 - Open market CLOs.
§ 246.9 Open market CLOs.
Is active in the origination, structuring and syndication of commercial loan transactions (as defined in § 246.14) and has played a primary role in the structuring, underwriting and distribution on the primary market of the CLO-eligible loan tranche.
Has taken an allocation of the funded portion of the syndicated credit facility under the terms of the transaction that includes the CLO-eligible loan tranche of at least 20 percent of the aggregate principal balance at origination, and no other member (or members affiliated with each other) of the syndication group that funded at origination has taken a greater allocation; and
Whose assets consist of senior, secured syndicated loans acquired by such CLO directly from the sellers thereof in open market transactions and of servicing assets,
That is managed by a CLO manager, and
That holds less than 50 percent of its assets, by aggregate outstanding principal amount, in loans syndicated by lead arrangers that are affiliates of the CLO or the CLO manager or originated by originators that are affiliates of the CLO or the CLO manager.
Either an initial loan syndication transaction or a secondary market transaction in which a seller offers senior, secured syndicated loans to prospective purchasers in the loan market on market terms on an arm's length basis, which prospective purchasers include, but are not limited to, entities that are not affiliated with the seller, or
Is not subordinate in right of payment to any other obligation for borrowed money of the commercial borrower,
Is secured by a valid first priority security interest or lien in or on specified collateral securing the commercial borrower's obligations under the loan, and
The value of the collateral subject to such first priority security interest or lien, together with other attributes of the obligor (including, without limitation, its general financial condition, ability to generate cash flow available for debt service and other demands for that cash flow), is adequate (in the commercially reasonable judgment of the CLO manager exercised at the time of investment) to repay the loan and to repay all other indebtedness of equal seniority secured by such first priority security interest or lien in or on the same collateral, and the CLO manager certifies, on or prior to each date that it acquires a loan constituting part of a new CLO-eligible tranche, that it has policies and procedures to evaluate the likelihood of repayment of loans acquired by the CLO and it has followed such policies and procedures in evaluating each CLO-eligible loan tranche.
(b) In general. A sponsor satisfies the risk retention requirements of § 246.3 with respect to an open market CLO transaction if:
(1) A minimum of 5 percent of the face amount of the CLO-eligible loan tranche is retained by the lead arranger thereof until the earliest of the repayment, maturity, involuntary and unscheduled acceleration, payment default, or bankruptcy default of such CLO-eligible loan tranche, provided that such lead arranger complies with limitations on hedging, transferring and pledging in § 246.12 with respect to the interest retained by the lead arranger.
(v) For each loan tranche, the full legal name of the lead arranger subject to the sales and hedging restrictions of § 246.12; and