The South African Reserve Bank’s Market Practitioners Group (MPG) legal workstream (which oversees legal matters related to the switch from JIBAR to ZARONIA) is holding their second Legal Industry Webinar on the transition to ZARONIA.  The LMA will be speaking on the webinar alongside ICMA and senior members of the MPG. 

On 24 June 2024, the LMA published a new USD Term SOFR loan agreement, governed by English law while assuming a variety of African borrowers/guarantors including Mauritius, Ghana, Nigeria, Kenya, Tanzania, Uganda and Zambia.

This aims to promote certainty for investors lending into Africa via the “Mauritian Holdco Structure”, whereby international investment is channelled into a Mauritian parent “Holdco” and “on-lent” to operating subsidiaries in the relevant African countries. Mauritius is popular due to a lack of foreign exchange controls, a strategic location, economic, political and legal stability, a raft of double tax treaties with other African countries and a skilled, bilingual workforce.

The LMA and APLMA are pleased to have published a joint open letter urging loan market participants to take all necessary steps to complete USD LIBOR transition. The FCA has made clear that the remaining tenors of USD synthetic LIBOR will be discontinued by end-September. We urge all loan market stakeholders to pass this message on to ensure no-one is left unprepared.

Click Read more to take part in our survey on the LMA’s RFR documentation suite. The results of the survey will help us in our ongoing process of reviewing and consolidating our documentation suite. The survey consists of 12 questions and requests your views on various RFR related documentation topics including EURIBOR fallbacks, alternative term rates, term SOFR fallbacks, baseline CAS and the most often used interest rate drafting. 

The LMA is pleased to have published a new guidance note on untied ECA financing, updated buyer credit documentation, and a supporting statement from the LMA’s Export Finance Working Party. 

Given the single currency nature of the buyer credit facility, there are now three variations of the buyer credit facility agreement. We have also published a new term SONIA commentary. The User Guide has also been expanded to cover commonly discussed areas. The new guidance and revised documentation can

On 7 June 2024, the LMA is pleased to have published a guidance note which sets out documentary considerations when dealing with a sovereign borrower or guarantor. The guidance has been produced following demand from LMA members, partly driven by recent experiences in the market in respect of sovereign distress cases.

The guidance note is intended to be a helpful tool for lenders, investors, borrowers and advisers of the relevant considerations in the context of dealing with sovereign obligors (which includes for these purposes a state-owned entity). 

The LMA will be taking part in a FTSE Russell webinar alongside ESMA looking at the progress in the loan market of the adoption of the Euro RFR Working Group’s recommendations on fallbacks to EURIBOR. One of the Working Group’s recommendations was for market participants to include a forward-looking €STR term rate-based fallback into specific segments of the loan and trade finance market.  

The LMA encourages members with EURIBOR-referencing loans to attend this FTSE Russell webinar. This is a unique opportunity for members to hear directly from, and ask questions to, ESMA on the EURIBOR fallback recommendations.  

Date: 26 June 2024

Time: 2:00pm BST / 3:00pm CET with Q&A

On 21 May 2024, the LMA is pleased to have published a form of drafting of an extension option for users of the LMA's recommended forms of facility agreements for investment grade transactions. 

The intention of the extension option is to provide a position that broadly reflects general market practice for an extension option in a syndicated facility to a corporate borrower with an investment grade credit rating.  As with all LMA recommended form documents, it is recognised that the negotiated terms of individual extension options can vary widely and the extension option seeks to provide a sensible starting point only.  The users guide sets out the basis on which the extension option is drafted, as well as highlighting in a non-exhaustive manner some of the negotiation points which may arise.

On 9 May 2024, we published further South African law documentation to assist the loan market in transitioning away from JIBAR to compounded ZARONIA. The Unsecured Single Currency Single Borrower Term and Revolving Facilities Agreement Incorporating Rate Switch Provisions (the “Exposure Draft SA Rate Switch Agreement”) provides for an in-built switch from JIBAR to a backward-looking compounded ZARONIA on the occurrence of specified trigger events.  It includes mechanics and provisions for transition which are intended to mitigate the risk of a further amendment being required.

On 2 May 2024, we published our updated guidance note in relation to the Directive on Administrative Cooperation (commonly known as "DAC6"). This follows a consultation on 28 March 2023 whereby the rules implementing DAC6 in the UK were repealed and replaced with The International Tax Enforcement (Disclosable Arrangements) Regulations 2023 (the "Regulations").

The guidance note covers the applicability of both regimes.

We are delighted to announce the publication of the LMA’s Sustainability Coordinator Letter (the SC Letter).

The SC Letter is intended to provide a starting point for negotiation where a sustainability coordinator is to be appointed on a sustainable lending transaction. 

The SC Letter is aligned with the Draft Provisions for Sustainability-Linked Loans published on 4 May 2023.

Given that the sustainability coordinator role is continuing to develop, the SC Letter will be kept under review and updated periodically as required. 

We would like to thank our dedicated working group and all members of our ESG Committee for their hard work on this project.

Improving efficiency, particularly around settlement times, in the primary and secondary loan markets continues to be one of the key goals of the LMA and its members.

Working with members of the Board from both the buy and sell side, the Board have approved a recommended timeline for settlement of primary leveraged loan syndication, incorporating fault based delayed settlement compensation. 

The timeline seeks to address the delays occurring by providing a set of recommended timings for key steps in the syndication process and where the recommended settlement time is not met, the introduction of a fault based delayed settlement compensation mechanism. 

The guidance looks to balance the competing interests of all stakeholders in the syndication process. The following key points should be noted:
 

• the timeline is a statement of recommended best practice with a target of 10 business days, meaning that it requires settlement - namely the potential lender/buyer becoming lender of record - within 10 business days from the later of the allocation date and the funding date;
• the compensation mechanism only applies to syndications where the facility agent, security agent, and underwriter are all part of the same group.

The LMA will keep these guidelines under review to ensure operational effectiveness, market impact, consistency with best practices, and fulfilment of the objectives of promoting greater efficiency and reduced settlement times. 

If appropriate and applicable, the LMA will look to extend to other areas of the loan market at a later stage. 

The LMA will look to track certain key metrics and maintain the existence of the Board Working Group to look at the utilization and impact of the guidance. 

The LMA is pleased to have published an updated version of its RFR destination table. The document has been revised in accordance with member feedback. As a result, it has been split into two destination tables: (i) A new table has been added which is divided by currency / RFR – this allows members to more easily locate the documents which are relevant for a particular currency / RFR; (ii) The existing table which is divided by sector to show the RFR equivalent (or most close equivalent) to a previously LIBOR-referencing LMA document. The updated destination tables are intended to make the LMA’s RFR documentation more easily accessible to members.  

With only 4 months to go until the cessation of CDOR, the LMA would like to invite members to two events being hosted by the Bank of Canada on the CDOR transition. 

29 February, PwC/CARR live webinar on the CDOR transition (4:00pm GMT)
This session will be focused on lending and hedging, as well as the transition away from the Bankers’ Acceptance market. For more information and to access the live event, please register with PwC at https://event.webcasts.com/starthere.jsp?ei=1653571&tp_key=3ea818391d. 

12 March, CDOR will end in less than 4 months: How financial markets are adapting to CORRA (in-person event)
The High Commission of Canada in the UK, in partnership with TMX and in collaboration with the CARR, will be hosting a panel discussion with industry experts including the CARR co-chairs, on the current transition from CDOR to CORRA. 
Event details:  12 March 2024, 16:00 - 18:00 GMT, Canada House, Trafalgar Square, London SW1Y 5BJ
To register, please send your RSVP to christiane.lavallee@tmx.com.  

The LMA is pleased to announce publication of revised Schuldschein Loan Agreements in German and English language.

As with the original versions, the revised LMA Schuldschein Loan Agreements are available in German and English language for both single borrower and single borrower with guarantor transaction structures. 

The revisions have been considered and agreed by members of the original working party and reflect changes in law, feedback received from market participants since 2018, developments in relation to reference rate fall-back provisions and aligning the security over lenders’ rights clause to the relevant clause provided for in the German law precedent for syndicated facilities. 

We have been part of the Euro RFR Working Group and have worked with the Group on strengthening fallbacks to EURIBOR. 

On 1 February 2024, we published an updated version of our term €STR fallback exposure draft and related commentary following market feedback. As feedback received was generally supportive of the exposure draft, there have been no major changes. However, given the lack of market practice in the use of term €STR fallbacks, the LMA has not yet moved this document to recommended form.  As a result, we need members to provide us with ongoing feedback from the provisions being used on transactions. 

We have also updated the existing form of German law investment grade documentation to include a switch to compounded €STR upon a permanent cessation or non-representativeness of EURIBOR. 

We are delighted to announce the publication of the second edition of the ‘External Review Guidance for Green, Social and Sustainability-linked Loans’, produced in collaboration with the APLMA and LSTA.

The LMA is pleased to have published updated versions of its developing markets and pre-export finance (PXF) facility agreements for the transition to risk-free rates (RFRs). 

We are delighted to announce the publication of 'An Introduction to Green Loan Frameworks' (the Guide), an educational piece offering direction on green loan frameworks, as referenced in the February update of the Green Loan Principles (GLP). 
 

The LMA is pleased to release two new documents for use on real estate finance transactions as part of its ongoing work to improve efficiency in the syndicated loan market. 

We are delighted to announce the launch of our new introductory guide to sustainable finance, 'Getting Started in Sustainable Finance', produced in conjunction with the Association of Corporate Treasurers.

Intended for use by new entrants to the sustainable lending market, this guide describes the background to the emergence of sustainable lending, the global commitments driving the sustainability agenda, the range of products on offer and further resources at hand to help. 

We are delighted to have co-authored an article with Trowers & Hamlins focussing on sustainable finance for social housing.

This article explores the potential benefits of the use of green, social, and sustainability-linked loans in the social housing sector, and focusses on some of the related challenges and opportunities for market participants.

We are pleased to have published a user guide and revised recommended form of replacement of screen rate clause for the LMA’s South African law documents (“SA revised replacement of screen rate clause”). The SA revised replacement of screen rate clause is based on the LMA’s existing 2018 revised replacement of screen rate clause (as updated) produced in the context of LIBOR transition. However, it also has regard to the work of the MPG on sample reference language for bilateral loans and reflects specifics of the South African market and JIBAR transition. In order to provide additional context, there are footnotes explaining any differences in the LMA clause and the MPG sample clause.

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We are delighted to have released an article today focussing on mid-market sustainable finance, following a Regional Early Evening Seminar which we co-hosted with Browne Jacobson on 13 September 2023.

We have published an updated CORRA Schedule which provides drafting for term CORRA in addition to compounded CORRA. Further, we have updated both our CORRA Schedule and TONA Schedule to reflect the updated definition of the “Daily Rate” in the updated IG compounded rate documents to provide for an interim fallback to a historic rate (prior to the application of a central bank rate plus any adjustment spread). This addresses what is sometimes referred to as the “Good Friday issue”.

We are pleased to have published an exposure draft multicurrency term and revolving facilities agreement which incorporates term €STR fallbacks from EURIBOR. This is accompanied by a cover note providing a high-level summary of the fallback provisions set out in the document, and a separate commentary providing further detail of the provisions. Today, we have also published updated versions of our investment grade compounded rate facilities agreements, along with updated versions of the related term sheets and commentaries. 

The LMA has today published the term sheet to accompany its model provisions for sustainability-linked loans (SLLs). Contained in Part 8 of the Term Sheet for Leveraged Acquisition Finance Transactions (Term Sheet), the draft sustainability-linked loan terms can be inserted into the body of the Term Sheet or, as with the LMA's Draft Provisions for Sustainability-Linked Loans, be adapted for use in conjunction with the LMA's other recommended forms. 

The LMA, in conjunction with the European Leveraged Finance Association, is delighted to announce the publication of the updated Best Practice Guide to Sustainability-Linked Leveraged Loans (SLLLs, and the Guide).


 

We are delighted to have co-authored an article with Norton Rose Fulbright LLP focussing on financing sustainability in shipping. 

Shipping plays a critical role in facilitating efficient global trade and underpins the international economy. There are, however, a number of social and environmental issues which the industry will have to address. This article explores how the sustainability-linked loan product can be, and already is being, used in the context of shipping financing transactions to address these issues and align with the direction of regulatory changes designed to stimulate a more efficient industry.

 

LMA.Automate is delighted to have produced a new bilateral facility agreement, which has been made available to all subscribers on the platform. We believe this new template, being the first of its kind, will have a broad and compelling use case for all LMA.Automate subscribers, whether lenders or law firms.

The LMA is delighted to have co-authored an article with Norton Rose Fulbright LLP focussing on financing a sustainable future for the aviation industry. 

Aviation is essential for global mobility, but is a ‘hard-to-abate’ sector, meaning it is prohibitively costly or impossible to transition to net zero with currently available abatement technology. This article explores how the sustainability-linked loan product can be, and already is being, used in the context of aviation financing transactions to catalyse the transition to a more sustainable future.

We are pleased to have published our exposure draft term SOFR documentation as recommended form. The related term SOFR commentary has also been updated. The move to recommended form follows the increasing use in the market of the term SOFR provisions in the exposure drafts, market feedback received, the length of time since publication of the exposure drafts and the impending end-June 2023 deadline for US dollar LIBOR transition. 

We have published model provisions for sustainability-linked loans (SLLs).  These model provisions look to provide a proposed form of draft SLL provisions for inserting into LMA loan documentation, which are aligned with our Sustainability-Linked Loan Principles and accompanying Guidance notes.

We have published updated versions of the LMA intercreditor agreement for real estate finance transactions, and the LMA intercreditor agreement for real estate finance transactions (contractual subordination only). Amendments have been made to these documents to reflect the transition to risk-free rates as well as the UK's withdrawal from the European Union.  

We have today updated the corporate lending facility agreement available on the LMA.Automate platform to incorporate Term SOFR. This is part of the commitment to provide updated pre-automated LMA templates on the platform, including accommodation of the latest developments with respect to RFRs. 

The LMA is pleased to have published a note focusing on LMA facility documentation and the recommendations published by the working group on euro risk-free rates on EURIBOR fallback trigger events and €STR-based EURIBOR fallback rates (Euro WG Recommendations). Particularly, the note outlines the current approach taken to the Euro WG Recommendations in the LMA's recommended forms of English law multicurrency facility documentation which reference risk-free reference rates from the outset and aims to help market participants understand how they can use existing LMA RFR documentation to implement robust fallbacks to EURIBOR.    

We are pleased to have published a schedule for compounded in-arrear CORRA. This has been produced in response to demand from some participants in the syndicated lending market to provide a suggested form of drafting for use of compounded in-arrear CORRA in conjunction with the structure for use of compounded in-arrear risk-free reference rates contained in the LMA's existing compounded rate facilities agreements. As it is designed to work with the structure in the compounded rate facilities agreement, the schedule is largely technical in nature and follows the form of the other currency schedules already contained in the compounded rate facilities agreements. 

We have released a note which outlines the documentary implications for the replacement of TARGET2. Market participants may be aware that TARGET2, the Trans-European Automated Real-time Gross Settlement Express Transfer payment system, is due to be succeeded in March 2023 by a new real-time gross settlement system (to be called T2). After T2 becomes operational, the LMA intends to update its facility documentation in due course to expressly reference the new system. In the meantime, the note sets out the changes that the LMA plans to adopt in its definitions of relevant documentation once T2 has become operational. 

We have released a guidance note on the Register of Overseas Entities (ROE) regime. The ROE regime was established by the Economic Crime (Transparency and Enforcement) Act 2022 and came into force in two phases: on 1 August 2022 and 5 September 2022. The guidance note covers a range of key issues relating to the ROE regime and its impacts in the real estate finance (REF) context, including drafting for a new condition precedent to be included in LMA REF facility agreements that document deals to which the ROE regime applies. 

We have updated our Intercreditor Agreement for Leveraged Acquisition Finance Transactions (Senior/Mezzanine) (Compounded Rate/Term Rate) to fix a number of cross-references within the document. We have also produced a mark-up of this document against the LIBOR-referencing Intercreditor Agreement for Leveraged Acquisition Finance Transactions.

The LMA is pleased to have published a new exposure draft multicurrency term and revolving facilities agreement incorporating term SOFR (the IG Term SOFR Exposure Draft). The LMA has also released an updated expsoure draft single currency term and revolving facilities agreement incorporating term SOFR for use in developing markets jurisdictions, alongside an updated commentary (the Term SOFR Commentary), to reflect the IG Term SOFR Exposure Draft.

We are pleased to announce the publication of updated versions of our German Law Euro Term Facility Agreement for Real Estate Finance (REF) Multiproperty Investment Transactions (in both German and English). The latest updates to these documents follow changes to our primary documents to reflect the end of the Brexit transition period on 31st December 2020, as well as the removal of Reference Banks from the fallback waterfall. 

We have launched today automated LMA recommended form secondary trade confirmations on the LMA.Automate platform to support the secondary loan market.  Subscribers will now be able to generate secondary trade confirmations from an automated template incorporating all versions and options available in the latest static versions of the LMA recommended forms.  Secondary loan market participants should also note that the LMA recommended form confidentiality undertakings have already been automated and are available on the platform.  

The LMA is pleased to announce the publication of an updated version of its senior single currency term facility agreement for real estate finance multiproperty investment transactions (senior/mezzanine) which envisages the use of risk-free rates from the outset. A mark-up against the previous LIBOR referencing document has also been published at the same time so that members can see the changes that have been made.

The LMA, with the assistance of the Lloyd's Market Association ("Lloyd's") and the International Underwriting Association ("IUA"), has published a model form of Credit Risk Insurance Policy ("CRI Policy"). The CRI Policy is drafted: for the purposes of insuring single borrower credit risk arising from a loan agreement; and with a view to the CRR requirements for unfunded credit protection.

The CRI Policy was put together by an experienced working party, consisting of representatives from law firms, banks, brokers, insurers, Lloyd's and the IUA and was based on their first-hand experiences of undertaking such transactions.

On 20 June 2022, we published updates to our Real Estate Finance (REF) Investment Security Agreement, REF Development Security Agreement and REF Shareholder Security Agreement (the Security Agreements) following the enactment of the National Security and Investment Act 2021 (the NSIA).

The aim of the updates to the Security Agreements is to prevent finance parties from inadvertently finding themselves liable under the NSIA by blocking the automatic transfer of voting rights from the chargor to the security agent in circumstances where such transfer would otherwise amount to a notifiable acquisition under the NSIA. The relevant updates can be found in Clause 5.4 (Voting rights) of the Security Agreements. The accompanying user guides have also been updated to provide an explanation of the changes to the Security Agreements.

We are pleased to announce that, following detailed feedback received from our existing subscribers, we have today added an updated version of the corporate lending facility agreement and associated term sheet to the growing library of documents available on the LMA.Automate platform.
 

We have published revised versions of our real estate investment property facility agreement, development property facility agreement and associated term sheets which envisage the use of RFRs from the outset. Cumulative mark-ups against the previous LIBOR referencing documents have also been published so that members may see the changes which have been made.

We have published a security agreement and associated users guide for use in various common law African jurisdictions (these being Kenya, Nigeria, Tanzania, Uganda and Zambia) in the hopes that this will facilitate standardisation in cross border African deals by introducing a common framework and boilerplate across different legal systems.

The LMA is pleased to have published revised Trade Confirmations with an effective date of 18 February 2022. The revised Trade Confirmations incorporate amended wording in Other Terms of Trade tick-boxes for the exclusion of CAS and inclusion of zero floor options where Delayed Settlement Compensation applies. The revised Trade Confirmations (and amended wording for the tick-boxes) has not changed the position on these commercial issues and whether or not they apply to a particular trade must continue to be agreed by the parties at the time of trade. The Standard Terms & Conditions dated 4 January 2022 also remain unchanged.

The LMA is pleased to have published further documentation to assist the market with the transition to RFRs including a compounded TONA schedule, the French language version of the RFR French law document, an updated designated entity clause and updated RFR destination table.

The LMA is pleased to have published revised Standard Terms and Conditions, Trade Confirmations and forms of Participation Agreement to the Secondary Trading Documentation page under the LMA Documentation Index with an effective date of 4 January 2022. The revised Standard Terms and Conditions will therefore apply to all trades with a Trade Date on or after 4 January 2022 and will replace the previously published version.

The LMA has published its RFR Destination Table, which is intended to assist members in identifying the LMA RFR-referencing document which is most directly comparable to any given LMA LIBOR-referencing document. Where there is no direct equivalent, the table sets out the RFR-referencing document(s) which is/are most closely related and may be most helpful. The LMA has also published versions of the existing suite of German, Spanish and French law investment grade documentation based on compounded RFRs from the outset in place of LIBOR along with accompanying updated user guides.

The LMA has published versions of the existing suite of leveraged documentation, including facility and intercreditor agreements, based on compounded RFRs from the outset. Each facility agreement provides the option for users to select observation shift or not (rather than two versions being produced of each agreement). The commentary to the LMA compounded rate facilities agreements has also been updated.

In line with its core aim of improving liquidity in secondary syndicated loan markets, the LMA is pleased to have published an updated Exposure Draft of its Standard Terms and Conditions for secondary debt trading together with an accompanying Explanatory Note (and Example Settlement Calculations) and updated Trade Confirmations.

The LMA is pleased to have published an exposure draft single currency term and revolving facilities agreement incorporating term SOFR for use in developing markets jurisdictions alongside a commentary.

LMA.Automate is pleased to announce the addition of an automated corporate facility template to its existing suite of documents. Whilst also reflecting the transition from LIBOR to RFRs, this corporate facility template introduces more optionality than the current LMA IG facility documentation, facilitating a broader set of corporate lending scenarios. 

The LMA is pleased to have published a recommended form of revolving facilities agreement for use in borrowing base transactions (the "Borrowing Base Finance Document"). A user guide has been published alongside the Borrowing Base Finance Document.