Syndicated Finance Transactions: Documentation and Trading, Key Provisions, LSTA Forms

Description

In the past 30 years, the corporate loan market has changed dramatically. Where banks used to lend to corporate borrowers and keep those loans on their books, loans today are typically allocated and sold to other institutional lenders and investors. This broader investor base has brought remarkable growth in the volume of loans originated in the primary market and subsequently traded in the secondary market, facilitated in part by the standardization of loan and trading documentation.

Counsel should have a thorough understanding of how various credit facilities are structured for syndication and trading. Repayment, prepayment and pricing terms, reps and warranties, multi-lender provisions, assignment and participation conditions, events of default, and other essential provisions must reflect investor concerns.

The LSTA has created form loan documents including a Revolving Credit Facility for Investment Grade Borrowers (Oct. 2017), an Incremental Facility Amendment (April 2018), and Model Credit Agreement Provisions for use in leveraged finance and other transactions, which provide a good starting point for documenting a primary loan.

Standardized trading procedures and documentation are other components of an efficient and liquid syndicated loan market. Over the years, the LSTA has published a suite of secondary trade documents that parties can use to evidence and settle loan trades--these have gained broad acceptance in the industry. Finance counsel must understand how the arranger allocates loans and how they are subsequently traded, the role of the administrative agent, and the associated documentation.

Listen as our authoritative panel discusses current legal trends and documentation in loan syndication, as reflected in the LSTA primary lending and trading forms. The panel will also analyze some of the differences between the U.S. and European markets, as informed by the LMA forms.