Vistra Insights

Vistra Escrow Solutions in an Environment of Counterparty Risk

Helping to address the risk of defaults in acquisition transactions with escrow services.

The COVID-19 pandemic brings with it a level of economic uncertainty not seen in Asian markets for the last 17 years. In the last two weeks alone, we have witnessed the credit default swap spread of all Asian countries and their corporates surge drastically to new highs. Credit default swaps represent the market premium for credit interest insurance products on these Asian countries or their local companies. As the cost of this premium increases, it shows that the risk of corporate defaults is rising.  
 
At the same time, as this economic crisis rocks public and private businesses, private equity, real estate and distressed fund managers have plenty of liquidity to put to work, with more than USD2 trillion of dry powder waiting for the right opportunities. 
 
This backdrop creates the scene for asset and whole business buy-outs, mergers and acquisitions and other activities. 
 
However, this activity comes in an environment where the counterparty credit may not always be trusted, cash settlements are critical and the use of a trusted intermediary to ensure transaction closings is a key factor in driving a successful deal. 
 
Vistra escrow solutions provide this role as a trusted, independent intermediary between buyers and sellers in all sorts of private transactions.  Our cash escrow account allows buyers to show proof of funding under their acquisition agreement. Furthermore, our ability to stand in the middle of the sale and purchase transaction, allows both parties the peace of mind knowing that there is no risk of a deal closing failing to occur on the settlement date.
 
Vistra is a trusted name in the escrow services business with years of experience providing escrow settlement services for whole business sale transactions, real property purchases, and more complex cross-border transactions.  Our escrow solutions team has in-depth of knowledge in efficiently documenting escrow arrangements, onboarding clients to satisfy KYC and AML requirements and helping all parties to “get the deal done” amid the current market turbulence when counterparty risk is constantly called into question.

 

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