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Abstract
The panelists represented the issuer, vendor, investor, and trustee points of view. Questions and issues posed by the moderator included whether communication today between issuers and investors in securitization transactions is usually sufficient, sometimes sufficient, or rarely sufficient; historical challenges to effective communication between issuers and investors in the securitization market; the current process for getting messages to investors; the trustee’s role as the conduit for information; how issuers have tried to deal with challenges to effective communication; issuers’ experiences in communicating critical information to end-investors; how end-investors are identified; tools that allow investors to communicate with each other; whether such communication can or should be monitored; quality and timeliness of information that investors typically receive from trustees in a securitization; inherent reasons for insufficiency of information; and information available on a transaction from independent data providers.
TOPICS: Asset-backed securities (ABS), legal and regulatory issues for structured finance
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- Abstract
- From the trustee point of view, what have been some of the historical challenges to effective communication between issuers and investors in the securitization market? Please provide a brief description of the current process for getting messages to end investors and the trustee’s role as the “conduit” for information, including the services provided by the Depository Trust Company (DTC)
- From the perspective of the issuer, can you tell us how issuers have tried to deal with the challenges to effective communication?
- What has your experience been in communicating with your investors when you need to get critical information to them? How have you historically identified who the end investors are?
- What tools are there that might allow investors to communicate with each other (e.g., anonymous chat rooms or Deal Vector)? (I am told that Reg AB2 has a provision requiring an SEC filing that would allow investors to find each other, and that the trustee is given responsibility for getting the bondholders together.) Can or should such communication be monitored?
- Wearing your “investor” hat, can you comment on the quality and timeliness of information that you typically receive from the trustee in a securitization? Where do you see a holdup? Do you have a recommended solution?
- What are some of the inherent reasons for the “insufficiency of information” and the differences between what investors think they should be getting from trustees and what is available in forums such as the SFIG Roundtable this past October? Do investors currently have the power to get information they want through such measures as signing up for deal bulletins on trustee websites? (Note the generic use of the term “trustee” as a source of information, when other parties such as the master servicer and the bond administrator are also involved in the chain.)
- What information do Bloomberg and other independent data providers have available on a transaction to share with investors on an ongoing basis? Can you describe the Investor Direct Notification Service? What is it and how does it work?
- Final Question: In five words, summarize the single most important factor in improving bondholder communication.
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