International Debt Capital Markets - Law & Practice.

This course covers law and practice of the international debt capital markets after the (first) credit crunch. It discusses the workings of the capital markets generally, its participants and legal and regulatory framework, along with a range of financial instruments such as (various types of) securitisations, (structured) bonds and hybrid transactions. The Sovereign Debt Crisis and its implications for Australiasia is a prominent feature of the course. Recent European and US credit crunch litigation (involving investment banks, hedge funds, rating agencies and derivative products) is another important feature. Actual transactions, their structure and documentation are discussed in class, in order to allow students to enhance their practical experience and further their legal career. Experts from various disciplines provide guest lectures.

The lecture schedule from the March 2011 University of Melbourne course is attached below. The 2012 course will be substantially based thereon. Further details are available on the designated site of the course.

As example, the slides of the last lecture on covered bonds is attached in this link.

 

NB: the below outline is indicative and may change. It is intended to give an idea of the broad range of topics to be covered as part of the course as well as the interactivity. Also, guest lecturers drawn from both law firms and for instance rating agencies will be involved. The focus of the course is to facilitate the career development of the students by addressing both the fundamentals as well as the practical implications of current developments. In 2011 the attendance was very strong, and this set-up builds upon it. The students' feedback on the course was overwhelmingly positive.

 

Those who have enrolled already, or are interested to do so, are recommended to link up by social media (Facebook, LinkedIn) to receive updates on and links to articles in the financial press relevant to the course as a means to familiarise themselves with the topics to be discussed and ensure a smooth start.

As in past years, the intent is to continue this updating service AFTER the course, during the time in which research papers were prepared.

   

INTERNATIONAL DEBT CAPITAL MARKETS - LAW AND PRACTICE

                                                                                          COURSE SCHEDULE

 

University of Melbourne, Postgraduate Law Program

Intensive, 19-23 March, 2012

 

Day 1: Monday, March 19, 2011

 Lecture 1 (9-10.30am)

Introduction to International Capital Markets - From the Credit Crunch to The Sovereign Debt Crisis

  • Overview of the course and learning objectives
  • The role of the capital markets in funding
  • The main features of capital market products, relevance of listing on an exchange
  • Lessons from the first credit crunch, where has originate - warehouse - distribute gone?

 

Lecture 2 (11am-12.30pm)

Reform

  • Change, change, change, how to make sense of it all?
  • investor protection, transparency
  • regulatory capital (Basel III), a level playing field globally? (Russia, Asia)
  • bank resolution, bail-ins
  • Vickers report, will the EU follow?
  • supervisory reform and intervention

 

Lecture 3 (1.30-3.00pm)

The Plain Vanilla Bond

  • Jargon buster
  • Key differences between a bond and a loan
  • Basic terms and conditions
  • Structure and documentation overview

 

 Lecture 4 (3.30pm-5.00pm)

The Use of Trusts and Documentation Issues

 

  • The role of the  trustee, common legal issues
  • Waterfall
  • Structural and documentation issues - how to draw and understand a structured finance transaction
  • Key case law

 

Day 2: Tuesday, March 20, 2011

 

Lecture 5 (9.00-10.30am)

Regulatory & Driven Transactions

  • Regulatory capital - Basel III and beyond
  • (what's left of) Hybrids (Tier 1) and contingent capital
  • Subordinated (Tier 2) bonds
  • Convertible bonds

 

Lecture 6 (11am - 12.30pm)

Securitisation: CDOs, CLOs, RMBS and ABS

  • Important funding source
  • Legal structure of securitisation transactions
  • Different types of securitisation
  • Experience in Europe and Asia (drawn from real life examples)
  • Re-characterisation
  • Key case law

 

Lecture 7 (1.30 - 3.00pm)

Covered Bonds

  • rationale, key risks and benefits
  • different covered bond structures, documentation
  • Australian experience in covered bonds; regulatory framework
  • international comparison (in both Europe and emerging markets, again drawn from real life examples)

 

Lecture 8 (3.30-5.00pm)

Covered Bond Term Sheet Exercise

  • Analyse the documentation of capital market transactions, from a plain vanilla bond to a complex securitisation.
  • Group discussion of a ‘mock’ covered bond term sheet, practical considerations

 

Day 3: Wednesday, March 21, 2011

 

Lecture 9 (9.00-10.30am)

Tax Aspects of Capital Market Transactions

 

  • Structured deals are driven by a variety of considerations, truly multi-disciplinary in nature and in the team involved; understanding of non-legal considerations is key
  • Tax treatment of capital market products generally
  • Hybrid issues and derivative-linked issues
  • Credit default swaps and tax issues

 

Lecture 10 (11am - 12.30pm)

The Impact of Global Accountancy Changes on Capital Markets

 

  • An overview of the changes to accountancy rules and their impact on existing and future capital market transactions, in particular for securitisations and covered bonds

 

No lectures on Wednesday afternoon.

 

Day 4: Thursday, March 22, 2011

 

Lecture 13 (9.00-10.30am)

Credit Derivatives

  • The credit revolution: from syndications to credit derivatives
  • CDS and the Euro crisis, an instrument under threat? The role of ISDA and its decision making process
  • Credit derivatives documentation - credit events in detail
  • Re-characterisation risk in credit derivatives
  • Key case law

 

Lecture 14 (11.00am-12.30pm)

Structured Notes and Regulatory Enforcement

 

  • the mechanics and legal issues surrounding a credit-linked note
  • expand to the use of other types of derivatives in structured notes generally
  • the regulators and structured products - aspects of reform in Asia and beyond
  • key case law: SEC v Goldman Sachs, Basis Capital
  • regulatory enforcement

 

Lecture 15 (1.30-3.00pm)

Euro Sovereign Debt Crisis

 

  • Where are we now - the facts - how did it get to this?
  • The implications beyond Europe
  • The practical consequences for international finance and lawyers
  • Opportunities for Asia - the end of 'Emerging Markets'?
  • Group discussion

 

 Lecture 16 (3.30-5.00pm)

Visit to the Trading Desk of a Major Bank

 

  • Operational risks and how to manage them- rogue traders
  • High frequency trading: risks for the market and regulatory response
  • Question time

 

Day 5: Friday, March 11, 2011

 

Lecture 17 (9.00-10.30am)

Litigation

 

  • Misrepresentation, duty of care: the fundamentals
  • Overview of key case law in international finance
  • Examples drawn from actual cases in Australia, England and the US
  • Monoline insurance companies in court
  • Lessons for practitioners

 

Lecture 18(11.00am-12.30pm)

The Role of a Rating Agency

 

  • Rating of an Australian RMBS in practice
  • What is the role of a rating agency?
  • Rating agencies in the crosshairs: the regulators strike back
  • Group discussion

 

 Lecture 19 (1.30-3.00pm)

Fund Manager's Perspective

 

  • Fund Management and capital markets
  • Exchange traded-funds
  • The implications of the regulatory change in the US (for instance the Volcker Rule) and in Europe (the Alternative Investment Fund Manager Directive or AIFM) in practice

 

 Lecture 20 (3.30-5.00pm)

Course Wrap-up

 

  • Project bonds
  • Key issues for the development of capital markets in emerging markets
  • New developments / reserve
  • Course wrap-up, Q&A