Notwithstanding the increasing convergence of market
practice in New York and London for syndicated loans,
differences remain. These differences are attributable to many
factors, including different English and New York legal
principles, expectations of market participants and, sometimes,
habit. This article is the first in a series comparing
syndicated loan market practice and underlying legal
considerations in London and New York.
Aside from transactions such as credit default swaps and
other derivatives instruments, the principle means by which
lenders reduce existing credit exposure to borrowers is by
assigning or transferring those credit exposures to other
lenders or by selling to other lenders participations (in New
York parlance) or sub-participations (in British parlance) in
those credit exposures.
In the case of assignments and transfers, the assignee or
transferee becomes the lender of record: it becomes a party to
the underlying agreement and thereby comes into contractual
privity with the borrower. But...