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CRE Finance World, Winter 2014

A publication of Winter issue 2014 sponsored by CRE Finance World Winter 2014 65 Exhibit 8 Selected Recent Loan Sales Improving Market Efficiency Our analysis of lending markets and the impact of legacy debt has highlighted a number of areas where we see improvements that could enhance the efficiency of markets going forward. This is not to say we can prevent a crisis in future cycles, but it could reduce the impacts. In particular we highlight the following: 1. Improved transparency of lending markets – central banks and regulators should take this opportunity to increase their oversight of lending markets, including the timely and detailed collection of data on lending under their supervision. Regional authorities should also support these measures to ensure the monitoring of cross border lending. Greater market intelligence could provide early indicators of stress in lending markets. 2. Fixed rate loans, without swaps, have been widely used for many years in the US markets, which despite its many other problems, has no debt funding gap. This is also partly due to the long maturities (10 years) and scheduled annual amortisation. This provides an opportunity for new non-bank lenders to change the basic lending terms in the market. Non-bank lenders might also find it easier to not offer swapped floating rate loans, as they are likely less motivated by the profitability of their swap desks. 3. Where swaps are put in place in transactions it is important that the term of the swap matches the terms of the loan. 4. Diversification of lending sources — we welcome the increased diversity of lending sources which reduces the impact of any future crisis on one particular source. i DTZ Insight, Net Debt Funding Gap, Shrinking gap means safe to lend against grade C, 25 November 2013 ii Global Financial Stability Report, Restoring Confidence and Progressing on Reforms, October 2012, IMF iii DTZ Insight, Net Debt Funding Gap, European gap to be bridged by 2015, with UK ahead, 14 November 2012. iv DTZ Insight, UK Lending Market, “Swap review to unlock legacy loans”, Hans Vrensen, 9 September 2013. Europe Progresses in Debt Workout


CRE Finance World, Winter 2014
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