October 10, 2023 - At the LSTA’s Annual Conference on October 12th, the Legal Perspectives on Loan Market Trends panel will provide both lenders’ and borrowers’ / sponsors’ perspectives on key legal issues impacting the loan market this year.  Moderated by Thomas Mellor (Morgan Lewis LLP), the panel of legal experts will include Sanders Witkow (Davis Polk LLP), who will provide the lenders’ view on both broadly syndicated loans and the middle market, Michelle Kilkenney (Kirkland & Ellis LLP), who will share how borrowers / sponsors have been navigating the deal landscape this year, and our bankruptcy expert, Monique Mulcare (Mayer Brown), who will examine the uptick in defaults and recoveries.

Last year presented a number of challenges for the loan market: interest rate rises, geopolitical tensions, and inflation concerns were top of the list.  That has all resulted in a more muted loan market this year.  US syndicated lending has dropped significantly, and new money institutional loan issuance has also decreased.  With sobering statistics as the backdrop, our panelists will examine the types of terms that are being included in deals and whether those terms are a departure from the borrower friendly terms of recent years and how they compare to the loan market’s historical terms.

Although the private credit market has also been impacted by higher interest rates, direct lenders are still gaining an increasing share of the loan market and have become more active in refinancings and M&A.  Last year, direct lenders avoided the riskier deals but can that be said this year, and with banks able to offer better pricing, perhaps they can begin to compete on terms too.

The two primary types of liability management transactions (LMTs) – the drop-down financings and the uptiering transaction – are familiar to us now, but a third type of LMT has emerged this year: the double dip structure.  Here, the lender will benefit from two claims against the company.  Are more borrowers negotiating deals to provide for the future flexibility of doing a LMT or are they now encountering pushback from lenders and not getting the language in their deals?  Finally, after years of not discussing the distressed market on the panel, our bankruptcy expert will share her thoughts on defaults.

During the session, the audience will be asked to weigh in on a key question or two through our Slido audience polling. Please join us for what will be an informative, engaging, and thought-provoking panel.  Click here to register for the LSTA’s Annual Conference.

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