Katten Muchin Forms Covered Bonds Team

NEW YORK – Katten Muchin Rosenman LLP is pleased to announce the formation of a Covered Bonds Team  within its Structured Finance and Securitization Practice .  These attorneys will leverage their knowledge and experience in the areas of structured finance, banking, derivatives and tax to help U.S. and European participants achieve success in the complex and growing covered bonds market.  The team will be co-chaired by Hays Ellisen  and Eric Adams , both New York-based partners and co-chairs of Katten’s Structured Finance and Securitization Practice.
 
A “covered bond” is a debt instrument secured by a perfected security interest in a specified pool of collateral, or “cover pool.”  Covered bonds, although similar to mortgage-backed securities, have important differences.  For example, covered bonds remain on the issuer’s balance sheet, are paid by the issuer’s general cash flows, are structured to avoid prepayment prior to the maturity date (through swaps and deposit agreements), and provide investors with recourse to both the cover pool and the issuer’s other assets.  
 
“Although there have been only two U.S. covered bonds issuances to date, a large and liquid market for covered bonds has existed in Europe for many years,” Mr. Adams said.  “Many expect that recent guidance issued by the FDIC and the Department of the Treasury will spur the growth of the U.S. covered bonds market as a potential alternative to the currently distressed residential mortgage securitization market.”

The United States Treasury Department recently noted that U.S. covered bonds “represent a potential additional source of financing that could reduce borrowing costs for homeowners, improve liquidity in the residential mortgage market and help depository institutions strengthen their balance sheets by diversifying their funding sources.”  Katten’s Covered Bonds Team will assist clients in structuring and executing successful covered bond transactions both in the United States and in Europe through its London affiliate, Katten Muchin Rosenman Cornish LLP . 

Founded in 1974, Katten Muchin Rosenman LLP is a full-service law firm with more than 650 attorneys in locations across the United States and an affiliate in London. The firm’s business-savvy professionals provide clients in numerous industries with sophisticated, high-value legal services, with a focus on corporate, financial services, litigation, real estate, commercial finance, intellectual property and trusts and estates. Among our clients are a wide range of public and private companies, including nearly a third of the Fortune 100, as well as a number of government and nonprofit organizations and individuals. For additional information, visit www.kattenlaw.com.