BY ELIZABETH YAZGI, ASSISTANT GENERAL COUNSEL. This article originally appeared in the 2024 Winter Edition of Loans Magazine. Last September, the LSTA collaborated with leading member institutions from its Private Credit Markets Committee to produce the “Private Corporate Credit – Representative Liability Management Transaction Protections for Credit Agreements” chart (alternatively, “Protections Chart” or “Chart”).1 The impetus for development of the tool was the renewed focus on how lenders can protect themselves from credit agreement flexibility that could permit liability management transactions (“LMTs”). The Protections Chart complements and builds off the LSTA’s “Liability Management Transaction: Drafting Fixes Market Advisory” published in December 2023, which summarizes the structural characteristics of the principle LMT categories, namely drop-down financings and uptiering transactions, and presents more granular drafting guidance as a “Documentation Checklist”. Whereas the Advisory had its origins in documentation trends seen in the BSL market, the Protections Chart’s innovation is to provide guidance for lenders operating in the private corporate credit (“PCC”) arena.
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