This week we continue our conversation with Tess Virmani, SVP and Associate General Counsel of the Loan Syndications and Trading Association (LSTA). Tess works with the LSTA’s Primary Market Committee and Trade Practices and Forms Committee on legal projects. She also works on advocacy and regulatory matters. Second of two parts – View part one.
The Lead Left: Does it help having one party control Congress?
Tess Virmani: It helps! But some people confuse a Republican majority as translating easily to a disapproval of the Guidance. That’s not necessarily the case.
TLL: But how much would change if LLG was approved as a rule?
TV: Probably not much in that it is being applied quite strictly now. What if it was disapproved? SNC [Shared National Credit] reviews aren’t going away. It might be hard to prove they aren’t applying the principles underlying LLG anyway. A big source of relief if the rule is disapproved would be on the monitoring requirements side.
TLL: So monitoring regulations would go away if LLG is disapproved.
TV: One of the results of the Guidance has been that banks’ “leveraged loan” books now include portions of the investment grade portfolio, because those companies are greater than 4x levered on a total basis or 3x levered on a senior basis. If banks no longer had to carry out the monitoring requirements for those loans, that would be welcome.