A recent amendment to U.K. financial collateral regulations aimed at alleviating the potential negative effects associated with recharacterization is being viewed by Moody’s Investors Service as a positive for structured finance transactions with swap agreements that include collateral posting positions. Moody’s says the amendment clarifies that “swap collateral posted to an issuer benefits from the protection of the regulations” and explicitly removes “any priority rights that preferential creditors of a collateral provider may have in respect of posted collateral.”

Click here to read the release from Moody’s.