CS Jumbo Deal Has Sunset Provision on Reps and Warrants

Late last week Credit Suisse came to market with a $330 million jumbo deal, which contains a wrinkle on representation and warranty clauses.

According to a research note from Standard & Poor’s, the difference between this jumbo bond and earlier ones issued by CS is that the new one includes time limits, or a sunset provision, where “investors may make claims for breaches of two particular representations and warranties from the relevant originator or R&W back-stop provider.”

S&P adds, “In addition, the offering attempts to clarify what constitutes a breach of an R&W.”

The RMBS market has attempted to balance the interests of investors and issuers while providing clear guidelines to all participants involved in the securitization process.

“We believe that traditional R&W provisions merit attention to provide greater clarity on repurchase responsibilities,” S&P said.

S&P gave the bond high ratings, but Fitch—which did not rate the deal—said it has insufficient credit enhancement to achieve an AAA rating.