The manner in which a lending transaction is structured is
critical to the overall deal success because it has an impact
on:
- the deal risk assessment;
- security package reliability;
- the total cost of financing (e.g., interest rate,
commission/fees, taxes/duties payable);
- deal execution speed; and
- post-closing matters (e.g., manageability of reporting
requirements, covenant compliance, debt servicing, etc.).
On-Shore Lending vs. Offshore Lending
Pros and Cons of On-Shore Lending (i.e., direct lending by a
foreign bank to a Ukrainian borrower)
Pros:
- more simple and straightforward from structuring standpoint and
in terms of transaction documentation;
- more robust Ukrainian security coverage from the enforcement
perspective due to a less restrictive currency control regime, in
particular, based on the current position of the National Bank of
Ukraine (the NBU) which is supported by applicable
NBU regulations:
