Between 13 and 20 December 2017, the Loan Market Association (LMA) published to its members revised versions of its suite of developing markets facility agreements, together with an updated users guide.
The key changes made include:
- the addition of a new form of facility agreement – a single currency unsecured revolving facility for multiple borrowers and guarantors which incorporates letter of credit facility provisions from the leveraged facility precedent;
- the introduction of optional fixed rate interest mechanics reflecting their prevalence in the current market;
- the incorporation of suggested sanctions-related definitions and provisions for the first time. This comes as a consequence of the steady convergence of some of these concepts on developing markets transactions. Clearly the language here comes with a health warning as lenders will continue to have their own particular institutional requirements which may vary from transaction to transaction. The LMA makes clear that parties will want to consider the approach taken on a case-by-case basis, for example whether:
- sanctions provisions should extend to the named sanctions regimes generally, as opposed to only regimes applicable to the Obligors;
- sanctions regimes should extend beyond the Obligor group and/or should benefit Affiliates of Finance Parties;
- amendments to sanctions provisions should require the consent of each lender and potentially also the Agent; and
- there is agreement on the remedies available to lenders in the event of a breach of the sanctions provisions;
- an extension of documentary protections to address potential risk under anti-corruption and anti-bribery regulations;
- consequential updates from the most recent round of changes to the LMA's investment grade and leveraged facility documentation made in July 2017.