Lender Innovation and the Facility Agent into 2023

Rising rates, volatile forex markets and uncertain supply chains are some of the factors driving Lender / Borrower innovation into 2023.

Changing Bargain

Unpack a typical APAC credit agreement and you will find a negotiated bargain between Lender, Borrower and Facility Agent.

A combination of ‘admin provisions’ (ie. interest calcs and loan mechanics), ‘commercial terms’ (ie, reps/undertakings/EODs etc) and ‘boiler plate items’ (ie. Indemnities, notices and agency).

Lender v Borrower

Lenders focus on: creditor equality, borrower information, margin protection and enforceability. Borrower on: certainty of finance, control of business, consent mechanisms etc.

Facility Agent and Workability

As FA we focus on ensuring that the admin, commercial and boiler plate terms are ‘workable’.

For the Lender ‘workable’ means timely payments and access to Borrower information. For Borrower it ensures efficient access to finance and consent processes.

Facility Agent in a rising rate market

With large amounts of dry debt power in hand, rising rates and volatile forex markets, lenders are innovating new lending solutions and we support with respect to:

• Interest period and interest calculations;
• Spot rate conversions and payments;
• Confirming day count conventions for local currencies;
• Dealing with LIBOR related credit adjustment spreads;
• Consistent and efficient payments and notices; and
• Base currency and quotation day calculations.

Rising rates generate new supply and demand side drivers for private debt solutions that will ensure 2023 will be another record year for APAC private debt markets.

#APAC #privatedebt #innovation