The buyside in general sees the efforts to cut/waive assignment fees as a positive step, but still a few dozens steps away from the promised land. Roughly 60% of respondents said moves to alleviate the assignment fee burden have helped the market, noting that lopping off fees can make smaller trades more economical and investors tend to gravitate toward the players that will waive fees. But a large part of the "yes" group gave a qualified endorsement.
The biggest caveat was that there is no uniform approach. One buysider noted that the moves are, "Just starting to take hold, but the practices vary widely. A more universal standard adopted by all desks would help the most."
Approximately 21% said they did not think efforts to cut or waive assignment fees have had any real impact on the market. Most cited a lack of consistency between the biggest players "Each dealer has a different spin on what they will or won't waive" -- and there was a recurring theme of some smoke and mirrors. "The fees are backed [into] the price," one respondent charged. Another noted, "It's hard to determine if it is being made up in the bid-ask spread."
In terms of structuring and handling fees, Merrill Lynch scored points with one investor in its Grief Brothers deal. "The best solution was Merrill Lynch's Grief Bros. deal where the issuer pays a higher admin fee to the agent for processing and no assignment fees to investors."
To be sure, the buyside seems to appreciate the effort to make it cheaper to trade bank loans. Even those who said it's not making much of a difference were all for the idea. "I like the move, but can't think of how it particularly has helped the market," one fund manager said.
Many respondents noted that all things being equal, shops waiving fees will be the ones they do business with. It will never make up for shortfalls in other areas, however, one manager noted. "Even the banks that do waive the assignment fee do not always have the best execution price. So why not just do the trade with the admin. agent bank, who not only gives us a better execution price but also waives the assignment fee?"
