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LSTA Presents at Debevoise & Plimpton LLP

January 17, 2018 - On Wednesday, January 17th, LSTA's Bridget Marsh, EVP and Deputy General Counsel, and Tess Virmani, LSTA-SVP and Associate General Counsel, presented on the LSTA and the loan market to the Finance Group of member firm, Debevoise & Plimpton. Click here for the slide deck. 

2017 was one of the most productive years for the LSTA Legal Team and the presentation highlighted a number of the new products released in 2017. First and foremost, the LSTA published its first form of credit agreement. This form is for a revolving credit facility and is not secured because it is designed for use by investment grade borrowers.  In addition to the revolving loans, the agreement provides for the issuance of letters of credit.  In addition, 2017 saw the publication of the LSTA Code of Conduct and Confidentiality Principles. These documents updated the near decade old LSTA Code of Conduct (2008), the MNPI Principles (2006) and the Confidential Information Supplement (2008). Although the loan market had evolved since publication of those documents, upon review, these critical market documents had stood the test of time remarkably well. The Code of Conduct establishes general principles of business conduct and related procedures for all market participants, compliance with which is completely voluntary. The latest revisions make it clear that the 2017 Code applies to all loan market activities, rather than solely trading activity. The 2017 Confidentiality Principles include both the contents of the 2006 MNPI Principles and the 2008 Confidential Information Supplement for ease of use. The Confidentiality Principles outline broad guidelines for the receipt, use and communication by and to loan market participants of confidential information that is generally available in the loan market. Importantly, the Principles set forth the four types of information in the loan market: Syndicate Information, Borrower Restricted Information, Bank Loan Non-Restricting Information and Public Information and contain guidance on the trading implications of these different types of information, including Syndicate Information and Borrower Restricted Information which may contain MNPI. In addition, the Principles highlight practices for "private side" and "public side" loan market participants and discuss important considerations for establishing information controls, policies and procedures.

Finally, all three of the LSTA’s Regulatory Guidances were updated in 2017. First, given how active the US government has been in using sanctions as a diplomatic tool, the "LSTA's Regulatory Guidance: US Sanctions in Lending Transactions" was updated twice in 2017.  The latest publication in December 2017 includes important updates about the termination of sanctions against The Sudan, the additional financial sanctions imposed on the Government of Venezuela, and new commentary on the situation in Iran and the Joint Comprehensive Plan of Action.  Because it is expected that significant movement in this area will continue in 2018, the LSTA plans to refresh this Guidance quarterly.  Second, 2016 set new records for the number of FCPA enforcement actions and the total amounts paid to resolve such actions, and we, therefore, updated our FCPA Guidance and will monitor the need for further revisions in 2018.  Third, the “LSTA’s Know Your Customer Considerations for Syndicated Lending and Loans“ was also revised in 2017 to account for FinCEN's May 2016 final rule adding a new requirement for covered financial institutions to identify/verify the identity of the beneficial owner of legal entity customers where a bank is required to conduct customer identification and verification procedures. Importantly, the LSTA Guidance carefully notes that in many loan market instances, a bank/customer relationship does not arise and as such this new requirement would not be applicable. However, for those situations where a customer relationship does arise and due diligence pursuant to a bank’s  customer identification program is required, members should note that the new rule went effective on July 11, 2016 and covered financial institutions must comply by May 2018. 

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