On March 2, S&P updated its criteria for rating certain U.S. RMBS backed by pre-2009 originated mortgage loans.  Report.

On March 1, Moody's updated its rating methodology for U.S. public electric utilities with generation ownership exposure.  Report.

On February 25, Fitch published its rating criteria for airports.  Report.

Oil & Gas Bankruptcy Issues: Part 4 Liens in Bankruptcy Cases

In the fourth installment of our oil & gas video series, Ron and Doug go over the often complicated process of securing liens for oil & gas operations, explaining what RBL liens typically attach to and how the liens compete with others invested parties. 

Bank of New York Mellon's Motion to Dismiss Denied in Part in Trustee RMBS Suit by Royal Park Investments

On March 2, Judge Gregory H. Woods of the United States District Court for the Southern District of New York issued an Opinion and Order denying in part and granting in part the Bank of New York Mellon's ("BNYM") motion to dismiss an action brought by Royal Park Investments SA/NV ("Royal Park") claiming damages of $1.12 billion arising from failures by BNYM, in its capacity as trustee, to protect the interests of investors in certain RMBS trusts.  Judge Woods denied arguments by BNYM that Royal Park had failed to plausibly allege BNYM's discovery and knowledge of (i) breaches of representations and warranties in securitized loans; and (ii) events of defaults committed by servicers of the relevant trusts.  Judge Woods did, however, dismiss Royal Park's claims against the bank for breach of trust, a violation of section 315(a) of the Trust Indenture Act, and the Streit Act.  Opinion and Order.

Claims Against RMBS Trustee U.S. Bank Partially Dismissed

On February 26, Judge Katherine B. Forrest of the U.S. District Court for the Southern District of New York denied U.S. Bank N.A.'s ("U.S. Bank") motion to dismiss claims for breach of contract and violation of the Trust Indenture Act ("TIA") with regard to the 27 trusts that remain before the Court after it previously declined to exercise supplemental jurisdiction over claims arising from an additional 810 trusts.  Orrick covered that decision here. The Court dismissed plaintiffs' claims for breach of fiduciary duty and extra-contractual duties under the economic loss doctrine, but did not dismiss plaintiffs' TIA-based claim, holding that the statute provides plaintiffs with a private right of action.  Judge Forrest also held that the Indentures' no-action clauses have no effect in suits against RMBS trustees, rejecting U.S. Bank's attempt to dismiss all claims against it on the basis of plaintiffs' non-compliance with those provisions.  Opinion and Order.

ECB Publishes Opinion on Proposed Regulation Extending Exemptions for Commodity Dealers under CRR

On March 4, the European Central Bank ("ECB") published an opinion on the European Commission's legislative proposal for a Regulation amending the Capital Requirements Regulation (CRR) to extend certain exemptions for commodity dealers. The opinion is a response to a request made by the Council of the European Union on January 12, 2016.

The ECB stated that it had not identified any concrete indications of systemic risk created by commodity dealers that would make it strictly necessary to remove the exemption for requirements concerning large exposures and own funds that apply at present. The EBA explained that given commodity dealers active in Europe are generally less leveraged and have more resilient capital structures than banks. However, the ECB regards a detailed impact analysis as a necessary step in terms of taking the most appropriate decision regarding the removal or the temporary extension of the exemption. In particular, consideration should be given to level playing-field issues relative to credit institutions which trade in commodities.

The ECB believes that the exemption should be of a temporary nature given the European Commission is expected to present a proposal for a comprehensive review of the prudential regulation of investment firms.  Opinion.

EBA Publishes Results of the CRDIV-CRR/Basel III Monitoring Exercise as of June 30, 2015

On March 2, the European Banking Authority ("EBA") published its report of its ninth Basel III monitoring exercise, particularly on the impact of the fully implemented Capital Requirements Directive and the Capital Requirements Regulation (CRDIV-CRR).

The exercise allowed the gathering of aggregate results on capital and liquidity ratios for banks in the European Union and the report summarizes the results using data as of June 30, 2015.

The results showed a further improvement of European banks' capital positions with only a small number of banks suffering from potential capital shortfalls.

The exercise monitored the leverage ratio, as defined in EU legislation, for the first time and indicated that the leverage ratio is a binding regulatory constraint for a significant number of institutions in the sample.

The results showed that there has been an increase in banks' liquidity coverage ratio over time, which the EBA attributed to structural adjustments and a recalibration of the liquidity coverage ratio framework, which was published in January 2013.  Report.

European Commission Adopts Delegated Regulation Relating to EMIR Clearing Obligations for Certain Credit Derivative Contracts

On March 1, the European Commission adopted a Delegated Regulation supplementing the European Union regulation on derivatives, central counterparties and trade repositories ("EMIR").

EMIR requires mandatory clearing of certain over-the-counter ("OTC") derivatives. The European Securities and Market Authority (ESMA) is required under EMIR to propose the classes of OTC derivatives that should be subject to clearing, as well as the different dates from which the clearing obligation will take effect for the different types of counterparties identified.

OTC derivative contracts concluded between the first authorisation of a central counterparty under EMIR and the later date on which the clearing obligation actually takes effect are also subject to clearing, unless they have a remaining maturity lower than the minimum remaining maturities which are to be laid down in the regulatory technical standards (Frontloading Requirement).

The Delegated Regulation determines the classes of the credit default swaps OTC derivative contracts that are subject to the clearing obligation and four different categories of counterparties for which different phase-in periods apply.

The Delegated Regulation also lays down the minimum remaining maturities for the purposes of the Frontloading Requirement as well as the dates on which the frontloading should start.  Delegated Regulation.