Borrowers and issuers across the leveraged finance market are
rapidly adjusting to the new Russia-related sanctions and
navigating the risk of exposure to sanctioned creditors.
Unsurprisingly, on a number of ongoing leveraged loan transactions,
borrowers have been asking syndication banks to confirm that no
allocation is being made to lenders that have been, or might
become, sanctioned.
Other borrowers have been seeking to include absolute
prohibitions on transfers to "sanctioned lenders" in
their credit agreements. Under this construct, the borrower would
also have the right to unilaterally remove a lender that becomes a
sanctioned lender, or is "reasonably anticipated to
become" a sanctioned lender, and would not be required to make
any payments to that lender. These terms could quickly become
market standard.
