Structuring Cross-Border Lending Transactions: Mitigating Legal, Economic and Political Risks

A live 90-minute CLE webinar with interactive Q&A


Wednesday, March 14, 2018

1:00pm-2:30pm EDT, 10:00am-11:30am PDT

or call 1-800-926-7926

This CLE webinar will provide finance counsel with the tools to structure around legal, political and economic risks encountered in cross-border lending. The panel will discuss choice of law provisions, foreign guarantors, exit strategies where access to collateral may be impaired, credit default swaps, and more.

Description

Cross-border lending has increased dramatically over the last few decades, from about $1.7 trillion in 1995 to over $7 trillion today. There are political, economic and legal risks associated with lending to foreign borrowers with foreign-based collateral. Structuring around these risks should be a threshold concern of finance counsel.

Choice of law provisions determine a contract’s validity and interpret the language of the contract if there is a dispute. The governing law in most international transactions has been either New York or English law, each considered sophisticated, stable and predictable, but there may be reasons to choose local law depending on the transaction.

A lender to a borrower in a jurisdiction with high legal risk may require a U.S. affiliate to act as the named borrower and/or guarantee the loan. The lender may also want to ensure that the guaranty is one of “payment” and not of “collection,” since the latter requires a lender to exhaust all remedies against a borrower before obligating the guarantor to pay.

With secured loans, if the legal risk of a borrower’s home country is high, lenders will often structure an “exit strategy” enforceable without reliance on the legal institutions of the borrower’s jurisdiction. Where political risk is high, a lender may purchase insurance on a risky loan, in the form of political risk insurance or a credit default swap.

Listen as our authoritative panel discusses how to structure around various risks associated with cross-border lending. The panel will examine choice of law provisions, structuring for foreign collateral and foreign guarantors, credit default swaps, and other risk mitigation strategies.

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Outline

  1. The rise of cross-border lending: current size and scope
  2. Legal, economic and political risks of transacting business with foreign borrowers and collateral
  3. Measuring risk: sovereign ratings, other
  4. Structural solutions
    1. Choice of law
    2. U.S. or other low-risk borrower and guarantor
    3. Exit strategies for overseas collateral
    4. Credit default swaps and other “insurance”
    5. Partnering with government lenders

Benefits

The panel will review these and other key issues:

  • What are some of the legal and enforcement risks in cross-border financing?
  • How might a lender gauge the political and economic climate in a particular country?
  • What factors should be considered in drafting a choice of law provision?
  • How should the financing be structured to allow for enforcement in the U.S. or other low-risk jurisdiction?
  • What are some exit strategies counsel might include in loan documents where enforcement against foreign collateral is uncertain?

Faculty

Bidwell Jr., J. Truman
J. Truman Bidwell, Jr.

Partner
Sullivan & Worcester

Mr. Bidwell is the co-chair of the Firm’s Opinions Committee. His practice is focused in the areas of...  |  Read More

Santucci, Ettore
Ettore A. Santucci

Partner
Goodwin Procter

Mr. Santucci chairs the Firm's Capital Markets Group and co-chairs the REITs and Real Estate M+A Group. He...  |  Read More

Chin, Sylvia
Sylvia Fung Chin

Partner
White & Case

Ms. Chin focuses her practice on corporate and commercial financing, with an emphasis on asset-based financing...  |  Read More

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