A PDF glossary of syndicated loan market terms brought to you by Practical Law and the Loan Syndications and Trading Association.

While the majority of sustainable finance activity has been on the equities side, the fixed income markets have also seen the development of green and sustainability linked products. On the loans side, the US loan market saw its first green loans and sustainability linked loans in 2018. Here are eight things you need to know about loans in the ever-changing world of sustainable finance.

We have worked with the LMA and APLMA to provide this Sustainable Lending Glossary of Terms. We hope that adopting a coordinated approach on the Glossary will promote the development, and use, of a common language surrounding green and sustainable lending across the globe.

The ESG Integrated Disclosure Project (ESG IDP) launched at the end of 2022—is a first-of-its-kind ESG harmonization effort for credit markets. The ESG IDP brings together leading lenders in the private credit and syndicated loan markets to improve transparency and accountability on ESG matters.

The green loan market aims to facilitate and support environmentally sustainable economic activity.  The Green Loan Principles (GLP) have been developed by an experienced working party, consisting of representatives from leading financial institutions active in the syndicated loan market, with a view to promoting the development and integrity of the green loan product.

In May 2022, the LSTA published revised Model Credit Agreement Provisions (“MCAPs”) which included modifications to the provisions relating to the treatment of entities prohibited from owning a borrower’s loans (the “LSTA DQ Structure”). We continue to hear from our members that the LSTA DQ Structure is still not being adhered to by certain credit agreement parties. As our members know, at the LSTA we do not wield the equivalent of a regulatory stick though for times like this it would be satisfying if we could do more then try to encourage and cajole our members into doing the right thing and adhering to the LSTA DQ structure.

Because we continue to receive reports from members who are frustrated by this lack of adherence to the LSTA DQ Structure, we would like to take the opportunity in this article to explain again the elements of that structure, the areas where we hear of parties departing from it, and then explain why liquid loans are so important for an efficient and healthy Loan Market. The message of this article is simple — to educate as many loan market participants as possible about the importance of adhering to the LSTA DQ Structure should a borrower choose to include a DQ list in its credit agreement.

The last eighteen months have seen ESG1 take hold in the loan market and, despite the COVID-19 crisis, ESG continues to be of increasing importance. This year there have been a number of exciting developments, from an industry response to calls for ESG information to further evolution in sustainable finance. Given the LSTA’s role in offering standardization to the loan market and our commitment to supporting market participants as they integrate ESG considerations into their processes and products, the LSTA has been at the forefront of many of these developments.

Sustainability linked loans aim to facilitate and support environmentally and socially sustainable economic activity and growth. The Sustainability Linked Loan Principles (SLLP) have been developed by an experienced working party, consisting of representatives from leading financial institutions active in the global syndicated loan markets.

What does “ESG” mean? As a broad umbrella term “ESG” refers to the environmental, social and governance factors which contribute to a company’s sustainability profile and overall performance. However, ESG can be adopted in a multitude of ways

This practice note provides an overview of sustainability-linked loans (SLL). Sustainability-themed debt instruments represent one response of the financial community to the need to channel capital towards facilitating a carbon transition.  A Lexis Practice Advisor Practice Note by Amara Gossin, Barclays and Robert Lewis, Sidley Austin.

Many articles have been written already about the important decision of Judge Furman of the SDNY in In re Citibank August 11, 2020 Wire Transfers (a.k.a. “Revlon”). That decision raised a number of issues for the loan market, and the LSTA assisted the market in addressing those issues by drafting a new erroneous payment provision (“EPP”) for credit agreements to limit the risk of a Revlon type situation—where an agent bank mistakenly pays lenders and cannot recoup those funds—happening again. In this article, LSTA’s Bridget Marsh reviews the LSTA draft form of EPP.