JIBFL: Rated Subscription Lines: Bringing Fund Governing Documents And Finance Documents Into Focus

In this In Practice article we will explore the benefits of obtaining a rating for a subscription facility. By reference to ratings criteria announced by the main agencies, we will explore how the limited partnership agreement, side letters and the related finance documentation are analysed to arrive at a rating.

Subscription credit facilities are typically structured as a revolving facility, designed to provide liquidity to a fund pending receipt of call proceeds from its investors. Such facilities may be drawn for the purpose of funding the equity portion of investments acquired by the fund, for the fund's general working capital purposes or for any other purpose permitted by the fund documents.