ARTICLE
9 February 2018

Amendments To Loan Origination Qualifying Investor AIF Requirements

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Arthur Cox

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On 7 February 2018, the Central Bank of Ireland issued a notice of its intention to make a change to the AIF Rulebook in respect of loan origination Qualifying Investor AIFs ("LO-QIAIFs").
Ireland Finance and Banking
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On 7 February 2018, the Central Bank of Ireland issued a notice of its intention to make a change to the AIF Rulebook in respect of loan origination Qualifying Investor AIFs ("LO-QIAIFs").

LO-QIAIFs are currently prohibited from engaging in activities other than lending and related operations. The Central Bank has previously clarified that not all of a LO-QIAIF's lending has to be structured as bilateral loans; lending can be structured as an investment in debt securities or as a participation in a syndicated lending arrangement. It has also clarified that investment in equity securities of a borrower as part of a typical loan package is also permitted. However, LO-QIAIFs have still been constrained in their investment in debt securities or other credit instruments when not part of a lending arrangement.

Following a review of these restrictions, the Central Bank has concluded that it is appropriate to allow LO-QIAIFs to have broader credit strategies. As a result, the AIF Rulebook will be amended with effect from 7 March to allow for direct investment by LO-QIAIFs in debt/credit instruments.

This amendment is a welcome relaxation of the investment restrictions imposed on LO-QIAIFs and will allow investment managers more flexibility to manage broader credit strategies within a LO-QIAIF.

The full text of the notice and the proposed AIF Rulebook change can be seen on the Central Bank's website here.

This article contains a general summary of developments and is not a complete or definitive statement of the law. Specific legal advice should be obtained where appropriate.

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