Kramer Levin Naftalis & Frankel LLP has a broad and diverse derivatives practice. The firm's derivatives practice group represents investment banks, hedge funds, public companies and other entities in all types of derivatives transactions, ranging from simple equity, foreign exchange and credit derivatives to highly-customized structured derivatives, including structured total return swaps and fund-linked equity swaps referencing a variety of underlying instruments and issuers.

We assist our clients in establishing master derivatives facilities, including negotiating the schedules to the ISDA master agreement, the credit support annex, various credit support documents and master confirmations.  We work with hedge fund families in efficiently establishing master facilities for multiple funds within the fund family with numerous banks and financial institutions.  We have a deep understanding of the issues that often arise in these negotiations, such as the scope of additional termination events for fund net asset value declines, key person departures and changes in the investment advisor; restricting the application of cross defaults, netting provisions and set-offs, especially in relation to affiliated funds; the intricacies of the credit support annex, including collateral delivery requirements; and tax and ERISA issues.  We recognize that these master facilities are simply a necessary step in establishing a framework for derivatives transactions between parties; we focus on protecting our clients’ interests in a results-oriented, practical way.

We have extensive experience working with all kinds of derivatives products from customary swaps to esoteric customized products developed for specific needs, including:

• Equity derivatives, such as contracts for differences transactions, call spread transactions and equity swap transactions for single securities, indices and baskets, including total return swaps
• Credit derivatives, including credit default swaps
• Commodity derivatives
• Interest rate derivatives
• Foreign exchange and other currency transactions
• Securities lending and repurchase arrangements
• Options

Recent transactions include:

Credit Default Swap Programs 

• Designed an innovative accounts receivable credit default swap program on behalf of a major bulge bracket investment bank for distribution to the bank’s clients facing credit exposure to their customers. Kramer Levin created structured CDS confirmations both between the bank (as seller of protection) and its clients seeking protection from a credit event affecting accounts receivable owed by a particular obligor and between the bank (as buyer of protection) and its hedge fund clients seeking indirect credit exposure to such obligors.
  

Total Return Swaps 

• Negotiated a $1 billion structured credit product/total return swap on behalf of a multi-billion dollar hedge fund which enabled the fund to gain synthetic exposure, on an unfunded basis, to loans made to distressed companies while maintaining most of the attributes of ownership. 
• Advised a multi-billion dollar hedge fund in connection with the structuring and negotiation of a large number of multi-million dollar total return swap confirmations with various major dealers, with a particular emphasis on emerging market companies.

Equity and Fund-linked Derivative Products 

• Structured a $400 million fund-linked total return swap program on behalf of one of the largest international accountancy and professional services firms designed to enable the accountancy firm to get synthetic exposure on a basket of hedge funds. 
• Advised a multi-billion dollar hedge fund in connection with the structuring and negotiation of two leveraged investments in the fund itself by the fund’s investment manager. Each investment was structured as an equity total return swap, with an aggregate of $34 million in leverage. 
• Represented a public company in connection with a convertible bond hedge transaction, structured as a call option, seeking to reduce the potential dilution impact upon conversion of certain debentures.

Our group of derivatives practitioners provides efficient and responsive service in the fast-paced and complex world of derivatives.  We understand the pressures that often accompany these transactions, where market opportunities appear and disappear rapidly and where a trusted advisor can make all the difference.  With these principles as our guide, our clients receive practical and results-oriented advice.