Four banks team up to standardise repackaging transactions
According to the banks, repackaged products provide the investor exposure to the underlying credit of an issuer and are specifically designed for the investor’s risk-return needs. In addition, cash flows can be customised with respect to payment dates, currencies and rates with the involvement of a swap counterparty.
The standardisation plan is the banks’ response to investors’ “demands”. They have also established a free library – called “Standard Repackaging Documentation” (SRD).
Pierre Lescourret, global head of engineering for equities and equity derivatives, Societe Generale Corporate and Investment Banking, says: “Given the demand for yield in the current low rate environment, these products will be in demand.”
The banks add that with SRD, investors will be “better able to compare securities issued or offered by different arranging banks, thereby increasing competition and choice”.
For this project the banks are working with international law firm Simmons & Simmons and some unnamed service providers to produce the documentation.
Other “eligible” banks will be “given the opportunity” to participate in the future development of the documentation based on “transparent, fair and non-discriminatory criteria to be determined”.