How a CLO trustee can free you up to focus on strategy

As a collateral agent or trustee, the Computershare team constantly anticipates challenges and ensures milestones are met under pressure. In fact, a client of ours recently thanked us for completing multiple transactions that "had a ton of moving pieces on an expedited timeline," for which our "speed, accuracy, flexibility, expertise, and partnership mentality…[was] greatly appreciated and [didn't] go unnoticed."

It is kind words like these that remind me of what is at stake for asset managers and issuers. Indeed, the growth in size and complexity of the private credit market underscores the need to choose a collateral agent or trustee of the right caliber, no matter the market segment. To ensure smooth operations and stakeholder confidence throughout your deal's lifecycle, here are four common pitfalls to avoid when evaluating a CLO trustee and loan administrator in today's market.

Does the provider have a single point of contact?

As a client, the last thing you need is to be left in a tangled web of communication, where simple inquiries require endless back-and-forth. A lack of personalized attention can lead to miscommunication, delays, and mistakes. A dedicated single point of contact who resolves inquiries in a single conversation saves time and frees you up to focus on strategic decisions. Precise and accurate responses also minimize the risk of misinformation, safeguarding your peace of mind and the interests of your investors and lenders. Additionally, having a team of experts coordinating closely across sales, relationship management and account management ensures that you are always informed of important developments and supported fully.

Does the collateral agent/trustee have sufficient ABL Facility and CLO experience?

A less experienced collateral agent or trustee may lack the insights needed to tailor workflows that account for the unique ways you process and track loans. Consider their track record. How many ABL Facilities and CLOs have they administered? Evaluating both the team's individual expertise and combined years of experience can provide a clearer picture of their capabilities and experience with a transaction's life cycle. Additionally, a provider experienced in a broader offering of structured finance services has more experience with which to address unusual circumstances should they arise.

Can the collateral agent/trustee onboard and set up the account quickly? In a fast-paced environment, deal timelines can be aggressive, and you need a collateral agent and trustee that can close multiple transactions quickly. Mismanaged timelines may delay the pre-closing stage.

A dedicated business negotiations team with full control over the pre-close and closing process may be able to move faster than one that relies on multiple teams. A a consultative, agile approach that helps you solve for any unique circumstances is critical to a successful closing. Additionally, robust collaboration is paramount to an effective transition from closing to the relationship management team. This streamlines compliance and reporting set-up and gets your transaction onboarded in the collateral agent/trustee's systems efficiently and accurately.

Is the collateral agent/trustee's loan administration and client service model efficient?

Once a deal closes, an inefficient and disconnected client service model can create unnecessary headaches. Strong organizational structure is needed to ensure your ABL Facility or CLO runs like clockwork. It's important to ensure your provider's loan administration, relationship management and client service teams work closely to ensure seamless administration of your CLO or ABL facility.

The corporate loan market is a complex, high-stakes arena. To succeed, you need a collateral agent or trustee that goes beyond templates to create tailored solutions. By keeping these potential pitfalls in mind, you can ensure CLO compliance and protect investor confidence.

How else can a trustee help free up your time? I would love to hear your thoughts at Alison.Roth@Computershare.com.