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 and facilities, ranging from simple equity, foreign exchange and credit derivatives to highly-customized structured derivatives, including structured total return swap facilities and fund-linked equity swaps. We regularly advise dealers and other market participants in responding to the unprecedented volatility and uncertainty in today’s derivatives marketplace, including in relation to bankruptcy proceedings affecting dealers, potential credit event, succession event and settlement questions in respect of credit default swaps and evolving derivatives trading infrastructure, regulatory and litigation matters. We use a multi-disciplinary approach, working in conjunction with experienced practitioners of our banking, capital markets, claims trading, corporate restructuring and bankruptcy, insurance, litigation and tax groups with extensive skill and experience to provide efficient and responsive expert advice to our clients on all aspects of derivatives transactions.

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 transactions 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.