Ruth Marken
Ruth is a Partner in the Finance Group at CMS. She previously worked at Slaughter & May in London and Paris.
Ruth advises on the full range of financing transactions, with expertise in acting for corporate and fund clients in the real estate and TMT sectors. She has a particular focus on complex structured transactions including derivatives.
Ruth has been described in The Legal 500 directory as "outstanding".
Some of Ruth's key transactions include advising a music publishing business on the securitisation of its receivables generated by music catalogues, a transaction which required a deep understanding of the music publishing business and its cashflows; advising an international television production group on its acquisition and production facilities; and advising a leading global manufacturer of IT products on taking security over international intellectual property.
Practice Areas
Panels
- Consulting Editorial Board
- Contributing Author
Qualified Year
- 2002
Education
- University of Oxford: BA, Jurisprudence
4 Contributions by Ruth Marken
PRACTICE NOTES
Aligning ISDA hedging with loan documents: Events of Default, termination on repayment, ring‑fencing, confirmations, credit support and securitisation—practical guidance for financing lawyers
Background
Loan deals are hammered out over an extended timeframe. Hedging is commonly arranged to underpin the borrowing, for example using an interest rate swap to switch a floating rate (often compounded SONIA (Sterling Overnight Index Average) or another Risk Free Rate (RFR)) under the facility agreement into a fixed rate. Yet it is typical for the hedging documents to appear only at the close of the transaction, framed as a condition precedent to drawdown of the loan and presented as a 'standard' form to be signed. This Practice Note explores the drawbacks of accepting that practice and explains how, by reviewing the International Swaps and Derivatives Association (ISDA) paperwork in the context of the facility agreement and other finance documents, parties can align terms to achieve a coherent position that mirrors the commercial bargain...
Banking & Finance
PRACTICE NOTES
Practical guide to loan hedging documentation: LMA facilities, hedging letters and ISDA alignment, intercreditor/security, caps versus swaps, fixed-rate break costs, hedge payments, covenants and regulatory compliance
This Practice Note outlines the principal documentation considerations in a loan financing that involve hedging. It addresses the core provisions found in the facility agreement, as well as hedging strategy letters, intercreditor agreements and security documentation. It also looks at fixed rate facilities and signposts useful links to relevant regulatory requirements. For detailed guidance on the ISDA suite, see Practice Note: Guide to hedging within a financing context—the ISDA documents. For commentary on why borrowers deploy hedging in lending transactions, see Practice Note: Use of derivatives to hedge against risk in a lending context—Hedging against risk in a lending context...
Facility agreement Hedging clause
Certain facility agreements contain a provision specifying the hedging obligations for the particular deal (see, for example, the alternatives in clause 8.3 (Hedging) of the Loan Market Association (LMA) Single Currency Term Facility Agreement for Real Estate Finance Multiproperty Investment Transactions with/without Observation Shift (LMA REF investment facility agreement)—the first alternative is intended where hedging is executed through an interest rate swap, while the second is intended where hedging is arranged through an interest rate cap...
Banking & Finance
PRACTICE NOTES
Real estate finance hedging: LMA REF Facility and ISDA alignment, intercreditor ranking and control, swaps and caps, covenant modelling, RFR floors and mismatches, security, and regulatory compliance
In real estate finance deals that incorporate hedging, a range of documentation points must be carefully addressed so the facility papers and the hedging terms are properly consistent and aligned. In addition, intercreditor matters arise, including the ranking of the hedging counterparty within the security package, who holds decision‑making powers under the facility agreement, and the practical consequences this has for the hedging counterparty in practice.
Why is hedging used in real estate finance? Real estate finance structures and hedging
Within a real estate finance arrangement, the borrower is commonly a special purpose vehicle (SPV) formed for the purpose of owning a property or a portfolio of properties. Typically, it has no income stream other than the rental income received from the property. For more information, see Practice Note: Introduction to real estate finance-the lending structure—Structure of a typical real estate finance investment transaction.
From the borrower’s (investment modelling) and the lender’s (credit control) perspectives, the financing arrangement is fundamentally based on an expectation that the net rental income produced by the property will adequately cover ongoing interest payments payable under the loan facility (and amortising principal instalments, if any). Any external influences that may affect the certainty of the...
Banking & Finance
CHECKLISTS
ISDA documentation for loan hedging: checklist covering term sheet, negotiation, signing/completion, security/intercreditor terms, clearing, regulatory compliance (EMIR/UK EMIR/Dodd-Frank), tax, capacity, authorisations and cross-border issues
This checklist outlines the principal ISDA documentary points that should be considered during a financing transaction.
Term sheet stage
If acting for a borrower and specialist hedging advisers are engaged, obtain their input on the term sheet.
If acting for a borrower, confirm the total pricing of the deal is clear (covering both the loan and the hedge). A borrower may pick a lender for a low loan margin, only to find that the swap credit spread from the same lender renders the overall economics less appealing than those from another lender.
Are the loan and hedging set on an IBOR basis (eg EURIBOR) or on a risk free rate (eg SONIA or SOFR)?
Does the lender require a zero floor in its loan? If acting for a borrower, ensure the borrower understands the consequences of any mismatch between this and the hedging documentation.
...
Banking & Finance
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