US and UK compared

Author: | Published: 1 Oct 2009

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...



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