Derivatives

Overview

Nixon Peabody provides sophisticated guidance on a broad range of derivatives, including interest rate, basis, commodity and currency swaps, as well as caps and options. Positioned at the forefront of this public finance tool, we use derivatives with new financings, and with restructuring and refunding existing financings.

Our team drafts and negotiates the legal documentation for these products and develops guidelines to help lenders review how they are used. We advise about Dodd-Frank compliance, including drafting internal policies and procedures, completing ISDA Protocol documentation, and bilateral contracts with swap counterparties.

Derivatives raise many federal tax issues, and these tax aspects are critical in achieving the intended financial benefits. We advise our clients about the following:

• The treatment of derivatives as qualified hedges for arbitrage yield purposes
• Loans or investments associated with lump sum payments
• The effect of derivatives on the treatment of payments on a debt as tax-exempt interest
• Reissuance and change in yield concerns that may arise from the termination of a derivative
• The impact of a subsequent securitization of tax-exempt bonds

Representative Experience

• State Serve as swaps/derivatives counsel in assisting with negotiating ISDA Master Agreements, amendments to swap documentation, and novation of swap transactions, as well as with Dodd-Frank Act compliance.
• State Transportation Agency Serve as swap counsel in assisting with negotiation of ISDA Master Agreements, related documentation and confirmations involving interest rate and commodity swaps, forward starting swaps, basis swaps, swaptions, and termination agreements. We have also represented this municipal issuer and affiliates with respect to amending and terminating swap transactions and with Dodd-Frank Act compliance.
• State Municipal Power Agency Serve as swap counsel by assisting in the negotiation of ISDA Master Agreements, related documentation and confirmations involving interest rate, and commodity swaps. We have represented this municipal issuer with respect to the negotiation of multiple swap transaction amendments, terminations, and novations relating to the restructuring of bond issues or to the credit deterioration of the swap counterparty. We have also assisted this municipal issuer with Dodd-Frank Act compliance.
• Corporate Entity and Affiliates Serve as swap counsel in negotiating Credit Support Annexes, ISDA Master Agreements, and amendments to ISDA Master Agreements, as well as with Dodd-Frank Act compliance.
• Higher Education Institution/Nonprofit Entity Served as swap counsel in the negotiation of an ISDA Master Agreement, Credit Support Annex, and Confirmation for an interest rate swap transaction, as well as for the amendment and early termination of such a swap transaction.
• Municipal Water District Represented in the negotiation of an ISDA Master Agreement and related documentation and the novation of several interest rate swap transactions.

Recognition

• Nixon Peabody was named by U.S. News/Best Lawyers® 2021 as “Law Firm of the Year” in Public Finance Law.
• Consistently ranked Top 10 in bond counsel, underwriter’s counsel, disclosure counsel, special tax counsel, and green bond counsel by Thomson Reuters.
• Nixon Peabody has been named a Tier 1 National firm by U.S. News – Best Lawyers® “Best Law Firms” in 2023 for Public Finance Law.
• Nixon Peabody was also named a First Tier metropolitan firm by U.S. News – Best Lawyers® “Best Law Firms” in 2023 for Public Finance Law in Rhode Island, Chicago, New York City, and Washington, DC, and for Municipal Law in Rochester.
• Ranked in Chambers USA for Public Finance.