Recent developments in investment grade lending: managing regulatory obligations within relationship termsJul 2015 | Client publication/article
Most investment grade borrowers are keen to obtain not only the best terms available in the market, but also terms that are tailored to them and that reflect the nature of an investment grade banking relationship. Many recent changes to investment grade lending terms relate to the impact of regulation affecting the financial sector or are a response to enforcement action by regulatory authorities. The management of these regulatory risks within relationship terms can be a particular challenge. Regulatory costs can be negotiated and allocated, but compliance obligations are mandatory and must be addressed in an appropriate manner.
This article, prepared for the July 2015 of the Loan Market Association News, summarises how the implications of regulatory issues such as benchmark regulation, FATCA and sanctions and anti-corruption laws are dealt with in the LMA’s Investment Grade Agreements and the extent to which those terms are being adapted and/or supplemented in the relationship-led sector of the loan market.
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