Swaps in Commercial Finance: Special Concerns With Modifications and Syndications, LIBOR Transition

Course Details
- smart_display Format
On-Demand
- signal_cellular_alt Difficulty Level
- work Practice Area
Banking and Finance
- event Date
Thursday, September 22, 2022
- schedule Time
1:00 p.m. ET./10:00 a.m. PT
- timer Program Length
90 minutes
-
This 90-minute webinar is eligible in most states for 1.5 CLE credits.
This CLE webinar will examine issues that can arise when loans that are hedged with interest rate swaps are modified, extended, or prepaid. The panel will discuss the complexities of entering and modifying swaps in syndicated credit facilities. The panel will also review what steps, if any, lenders must take with swap instruments tied to loans that have converted from LIBOR to SOFR or other index rates.
Faculty

Mr. Buonanno heads the firm's derivatives group and is a member of its opinion committee and its Uniform Commercial Code committee. Throughout a bank and law firm career spanning more than three decades, he has guided financial institutions, utilities, and other companies in a wide range of industries, helping them manage change, adapt to market developments, and achieve strategic objectives. Mr. Buonanno’s work has involved trillions of dollars in financial assets and has included strategic planning, corporate governance, enterprise structuring, mergers, acquisitions, divestitures, securities, capital markets, finance, securitization, insurance, risk management, commodities, derivatives, commercial transactions, housing, real estate, regulatory affairs, litigation and insolvency. As a result of that work, he has helped clients to serve their customers and grow their businesses while maximizing profitability, mitigating losses, allocating capital and managing other resources.

Mr. Pugaczewski’s practice focuses on the development and structuring of financial products and the documentation of complex over-the-counter (OTC) derivative transactions. He advises funds, banks, and other financial market participants in the development and structuring of financial products, and the documentation of OTC derivative transactions across all asset classes, including equity, fixed income, commodities, currencies, and crypto. Christian represents banks and corporate clients in relation to variable prepaid forwards, accelerated share buy-backs, capped calls related to convertible bond offerings, heat rate call options, synthetic CDOs, as well as all prime brokerage products. Mr. Pugaczewski’s experience includes the negotiation of all trading documentation, including, among others, ISDAs, repurchase agreements, listed futures, prime brokerage agreements, and the OTC cleared addendum.
Description
Modifications to loan payment terms including interest-only periods, payment deferrals, and loan maturity or amortization extensions, can benefit both the borrower and lender. But such modifications may necessitate an amendment of associated swap arrangements. For modified loans with an associated interest rate swap, lenders should consider what, if any, action should be taken with respect to the swap and how it should be addressed in the loan modification.
Swap issues are compounded in a syndicated credit facility. The credit agreement may interfere with the swap provider's ability to administer, close out, and enforce its swaps, or the loan documents may conflict with or override certain provisions in the ISDA Master Agreement and swap confirmations. Swap provider(s) must coordinate with the syndicated lender group in adjusting the swap to fit the modified loan.
The cessation of LIBOR may require modification of existing loans to substitute SOFR or another alternative base rate for LIBOR. This also may affect the terms of a corresponding swap.
Listen as our authoritative panel discusses the issues to consider when coordinating swaps with loan modifications and syndications.
Outline
- Swaps and other derivatives: application in commercial loan transactions
- Loan modifications that may affect swaps
- Modifying swaps to conform to new loan terms
- Swaps in loan syndications
- Impact of LIBOR transition on loans terms and swaps
Benefits
The panel will review these and other issues:
- How are swaps used to hedge against interest rate risk at initial loan origination?
- When should the lender modify swap terms to reflect changes in loan payment terms?
- What issues need to be addressed when modifying swap instruments in connection with syndicated loans?
- How has the termination of LIBOR affected LIBOR-based loans and corresponding swaps?
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