With its standardized documents boosting efficiency and liquidity in European investment-grade lending, the Loan Market Association (LMA) now wants to repeat the trick in the burgeoning leveraged market.
On January 28, the LMA unveiled its 195-page leveraged loan primary document. It was produced by a working party of bankers and lawyers, with input from the LMA's institutional investor committee.
Separate launches are planned in France and Germany, although no dates have been set. The leveraged buy-out market in Europe has grown from e18 billion in 1999 to e51 billion last year.
Producing a standard document for leveraged finance deals was a harder job than producing the investment-grade document. Leveraged loans need to be more adaptable than general corporate facilities, because they need to suit whichever target business is being bought out.
"Leveraged loans generally have more tranches, there are ancillary loans, and they are frequently cross-border," says Allen & Overy partner Mike Duncan, who worked with Clifford Chance's head of global finance, Mark Campbell, to draft the document.
Starting point "The document contains a menu of clauses," says Tim Ritchie, LMA chairman and head of global loans at Barclays Capital.