Distressed loan trading leaps forward as new tech tool slashes settlement time

Fft Trader PA 230x150
By Owen Sanderson
30 Oct 2019

Distressed loans using US documentation are some of the slow trades to settle in the capital markets, with an average time of 67 days, reflecting onerous legal requirements under the Loan Syndication and Trading Association standard terms. A new tool released by IHS Markit as part of its ClearPar loan settlement platform has the potential to slash this delay, with a recent trade by Deutsche Bank taking just 10 days to settle.

When a loan becomes distressed, participants trading it can request a change to the documents used to govern the transfer of the loan, adding a new purchase and sale agreement with extra reps and warranties, and having a full legal confirmation of the chain of title.

That means ...

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