View from the Riverbank – August 2016
Welcome to the summer 2016 edition of "View from the Riverbank".
2016 has been an interesting year so far for Fieldfisher, in particular:
- With the surprise results of the Brexit vote at the end of June, there is considerable uncertainty in the air. Added to this uncertainty is the lack of clarity as to when the exit process is set to commence and what form such an exit will take. This uncertainty is having an impact on the market and this is reflected in the wide range of speculations as to the effect of Brexit on the market and within different sectors. Some investors are seeing Brexit as an opportunity to snag a bargain investment. Other, more cautious investors are likely to watch the market for a while and see how Brexit plays out. To see our publication on Brexit Q&As click here.
- We have published "Alternative Financing, the only alternative for mining companies", a report aimed at the different sources of finance available to companies looking to develop, construct and expand their mining projects and analyses how a combination of sources is often required. Alternative financing is a key feature of the mining sector as cash-starved miners are forced to think creatively to secure the finance needed to bring their projects to production. This trend shows no signs of abating. Click here to see the full report.
- We also published a follow up piece to our healthcare report, "The Age of Investment in Care Homes". You can find this follow-up piece by clicking here. Whilst the piece was written in a pre-Brexit environment, we consider that the investment potential will continue.
- We have written a number of Real Estate Finance blogs since our last edition of View from the Riverbank. Please see link here to catch up.
If you have feedback or there is anything you would like to see covered in our publications, please do drop us a line.
Senior Associate and Editor
1. Recent developments in the hotel and leisure market
The UK and international hotel and leisure market has gone from strength to strength in recent years. Colliers identified that in 2015, hotel occupancy levels were above 80 per cent. in London and at 75 per cent. on average in the regional UK market. PWC predicts continued market growth across the UK in 2016. However, in the ever changing industry, owners and operators need to continue innovating their hotels and services to stay relevant.
Alex Campbell explores the future of the hotels and leisure sector. Read more.
2. Accounting for finance and operating leases – a simpler way forward
Robin Spender and Igor Stermsek explore the implications for corporate groups of HM Revenue and Customs and HM Treasury consultation on the tax deductibility of corporate interest expense in October of last year (which results have now been distilled and resulted in new rules to apply from 1 April 2017). Read more.
3. A pressing commitment
A recent High Court decision illustrates the potential perils for parties entering into what might be assumed (or at least appear) to be documents that are not legally binding. In Novus Aviation Limited v. Alubaf Arab International Bank BSC(c)  EWHC 1575 (Comm) it was held that a commitment letter signed by one party but not the other party was an enforceable contract such that the defendant's withdrawal from its terms constituted an anticipatory – and costly – breach of contract. Click through to Simon Lafferty's exploration of the facts of the case, the outcome and practical steps that can be taken to reduce the risk of documents expressed to be not legally binding being found to be so. Read more.
4. The ongoing impact of rating downgrades on structured finance transactions
Due to the credit exposure that structured finance transactions have to their operating parties, the credit ratings of the bonds issued under them are determined by, among other things, the credit rating of those operating parties. As such, operating parties are required to stay rated above a certain minimum threshold in order for the highest rating of the issued bonds to be maintained.
Alex Campbell explores the effect that the recent ratings downgrades have on structured finance transactions. Read More.
5. Buying Debt – Factoring in more Diligence?
A recent court of appeal case held that ordinarily there is no duty on a company whose debt has been purchased to inform the purchasing company of any pre-existing contractual arrangements it has with the company assigning the debt. If the purchasing company wants this information it must directly request it.
Click through to our article exploring the implications of this case for financiers purchasing debts or taking security over debts. Read More.