ÀÏ˾»úÎçÒ¹¸£Àû

View the related practice notes about Sub-participation

Selling a loan by sub-participation

Sub-participation is a means by which a lender can transfer its risk in a loan to another entity. It is used in the loan market as an alternative to assignment or novation. For information on loan transfers in a lending context, see Practice Note: Introductory guide to loan transfers.This Practice Note:•explains what is meant by funded sub-participation, risk-participation and credit default swaps•looks in more detail at the key consideration when entering into a sub-participation, and•discusses the recommended form Loan Market Association (LMA) sub-participation agreement for par/distressed tradesWhat is meant by sub-participation?Sub-participation differs from novation and assignment because it does not involve any transfer of rights or obligations in the loan. Rather, it creates a new set of rights and obligations between the lender of record that is party to the finance documents and the sub-participant. This is a separate, new arrangement that is totally distinct from the original transaction and requires a separate set of documents.The original loan stays in place and the relationship between the borrower and the lender...

Comparing UK and US secondary debt trading markets, with particular reference to the LMA v LSTA recommended terms for secondary trading

Comparing UK and US secondary debt trading markets, with particular reference to the LMA v LSTA recommended terms for secondary trading The UK and US secondary (private) debt trading markets are very similar when transacted on the suite of documents issued by the Loan Market Association (LMA) in the UK and by the Loan Syndications and Trading Association (LSTA) in the US. For more information on the documentation, terms and mechanics for LMA secondary debt trades, see Practice Notes: • Overview of the key documentation in a typical secondary debt trade • Secondary debt trading—timeline of a typical trade • Secondary debt trading—completing the trade confirmation, and • Key provisions in the LMA standard terms and conditions for secondary debt trading Historically, there has been a great deal of convergence between the two debt-trading regimes and conventions so that in most salient respects they are substantially similar. Nonetheless, the two-debt trading regimes and conventions contain some material differences as noted below. Governing law and legal...