March 25, 2022 - The LSTA Model Credit Agreement Provisions have gradually been expanded over the years.  When first published about 20 years ago, they addressed the relationships among the agent and the lenders, as well as certain other technical matters, including: yield protection; set-off; payment sharing; borrower indemnity, expense reimbursement and limitation on damages; jurisdiction/governing law; confidentiality; and notices.  LSTA and its members knew then that adoption of market standard provisions of this type would reduce uncertainty, particularly in periods of market stress.  They would also help to reduce transaction costs in connection with originations activity and limit the time and cost of legal review.  When the MCAPs were republished in 2014, that iteration made them generally leveraged-finance focused.  At that time, they included a disqualified institution structure, buyback language, and  updates to other provisions such as the confidentiality provision. This Exposure Draft incorporates language that the LSTA has published in market advisories and also includes conforming changes to other legal forms that we have published more recently.  It also includes the LSTA Form of Erroneous Payment Provision (EPP) which had been in draft last year. The EPP language has been included and generally reflects the language around which the market has coalesced in recent months. The confidentiality provision has also been slightly revised and now, for example, specifically references credit insurers.  Finally, the Exposure Draft also reflects the updates that had been made to the letter of credit related  language in the revolving credit facility that we updated and republished at the end of 2021.

Please find here the Exposure Draft of the LSTA’s Model Credit Agreement Provisions (MCAPs) and here the blacklined version which shows the changes made to the existing 2014 publication. 

3. Confidentiality Provision – The confidentiality provision has been slightly revised and now, for example, specifically references credit insurers.

Please feel free to contact me if you have any questions. The plan is to publish this in final form in April.

Please find here a revised version of the Exposure Draft of the MCAPs and here a blacklined version which shows the changes made to the draft sent to you earlier this month. We took the opportunity to conform the MCAPs to the Revolving Credit Facility (Revolver) that was republished at the end of last year (the changes relate to the letter of credit changes that had been made to the Revolver).  Because the revisions are of a conforming nature, we are not extending the Exposure Draft Period and the plan remains, therefore, to publish the MCAPs in final form in April.

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