LSTA completes Model Credit Agreement Provisions to reduce legal work on loans

By Sara Rosenberg

New York, Dec. 15 - The Loan Syndications and Trading Association said it completed new Model Credit Agreement Provisions intended to reduce the legal review needed for loans.

The provisions are designed to promote liquidity and efficiency in the syndicated loan market by limiting legal review for primary and secondary sales to an "exceptions" basis, thereby reducing time and expense, according to an association news release.

The association began developing the provisions in March 2002. The association worked with a group of senior business and legal professionals from Bank of America, Bank of New York, Bank One, CIBC, Citigroup, Credit Suisse First Boston, Deutsche Bank, Goldman Sachs and JP Morgan Chase. Chairing the group was Jane Summers, LSTA general counsel.

"Adoption of these provisions in the market would not have been possible without the consensus built among agents, investors and borrowers in the syndicated lending market over the course of nearly two years," Summers said.

"The LSTA recognizes that flexibility and innovation are the hallmarks of the syndicated lending market and, in keeping with these principles, we expect that these provisions will undergo continual vigorous review to assure they reflect best practices. In fact, we will be taking a fresh look at the assignment provision and the inter-lender sharing provision early in 2004."

"I believe I speak for everyone involved when I say that these provisions will help promote liquidity and efficiency in the syndicated loan market," said Daniel Toscano, managing director, head of U.S. Loan Syndications, Deutsche Bank Securities Inc., in the release.

"Careful consideration was given to the varied interests of borrowers, agents and syndicate members in developing these provisions," said James Baldino, managing director, Head of Credit Portfolio Management at Bank One, in the release. "The result is a set of provisions that allow borrowers and arrangers, sellers and buyers to focus on credit-specific concerns, navigate more quickly through negotiations and capture greater efficiencies in the marketplace."

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