Amidst this market growth and increased regulatory oversight, the role of the trustee as a uniquely positioned intermediary perched in between issuers and investors is becoming an increasingly vital one. During a panel discussion on day one, Olufemi Oye, Head of Special Situations, Trust & Agency Services at Deutsche Bank, shared his insights on some of the key trends facing trustees.
There is a delicate balance for trustees between fulfilling their fiduciary duties (either actively or passively) and assisting the originators and issuers in maintaining efficient structures within the prescribed mandate.
Oye told the ABS conference that trustees should only step in to amend or modify the terms of a structured finance transaction under a limited set of circumstances, namely to concur with the issuers to make changes which are not materially prejudicial to the interests of noteholders, or which are formal, minor or technical or to correct a manifest error. A trustee should always take such appropriate legal, financial or expert advice as required in order to determine whether it can properly exercise discretion in relation to proposals which have been presented to it. He explained interventions need to be carefully considered and properly reasoned as amendments and modifications can have an impact on the commercial terms of structured finance transactions, occasionally to the detriment of certain bondholders.