Sector developments and company hires

RFC issued on GSE living wills
The US FHFA is seeking comment on a notice of proposed rulemaking that would require Fannie Mae and Freddie Mac to develop resolution plans (or ‘living wills’) that would facilitate a rapid and orderly resolution, should the authority have to be appointed their receiver under the Housing and Economic Recovery Act of 2008. The proposed rule is similar to those issued by the US Fed and the FDIC under the Dodd-Frank Act, which requires many large financial institutions to submit living wills.

Under the proposed rule, the GSEs must demonstrate how core or important business lines would be maintained to ensure continued support for mortgage finance and stabilise the housing finance system, without extraordinary government support to prevent an enterprise from being placed in receivership, indemnify investors against losses or fund the resolution of an enterprise.

Comments on the proposed rule should be submitted within 60 days of its publication in the Federal Register.

In other news…

BDC merger completed
Barings BDC has closed its merger with MVC Capital. The combined company - which will remain externally managed by Barings - is expected to have more than US$1.5bn of assets under management on a pro forma basis.

Approximately 17,354,372 million Barings BDC shares will be issued to MVC Capital shareholders in connection with the merger, resulting in MVC Capital shareholders and Barings BDC shareholders owning 26.6% and 73.4% of the combined company respectively. In addition, following the closing of the merger, Barings and Barings BDC entered into an amended and restated investment advisory agreement that, among other things, reduced the annual base management fee payable to Barings from 1.375% to 1.250% of Barings BDC's gross assets.

Barings BDC also increased the size of its board of directors from seven directors to eight directors, appointing former MVC Capital director Robert Knapp to serve as an independent member of the board. He will serve on each standing committee of the board.