Brexit—examining the implications for leveraged finance

Brexit—examining the implications for leveraged finance

Matthew Dunn, partner at Clifford Chance, discusses the potential implications for leveraged finance following the UK’s decision to leave the EU.

Has the UK's vote in favour of Brexit had any immediate effects on funding for leveraged acquisitions or refinancings?

We haven’t seen any immediate impact in terms of increased pricing or reduced availability of credit in the European leveraged loan market since the Brexit referendum. On a longer-term basis, if sterling experiences sustained volatility against the euro and/or dollar, non-bank lenders with euro or dollar-based funding may seek to increase pricing for sterling loan tranches in order to reflect increased swap costs. However, any long-term effects will be dependent on the Brexit negotiations and the terms eventually agreed with the remaining EU Member States.

What will be the key concerns of private equity funds?

Private equity sponsors will want to ensure that they can put in place certain funds financings for leveraged acquisitions regardless of any speculation as to market conditions and the form that Brexit may take in due course. For example, we expect sponsors to seek to ensure that there are no Material Adverse Effect conditions to commitment documents, such that they may be resista

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About the author:

Miranda is a solicitor specialising in leveraged and acquisition finance. She trained at Hogan Lovells International LLP and qualified into the international banking and finance team. During her time at Hogan Lovells she worked on a variety of domestic and cross-border transactions, acting for both borrowers and lenders. She also experienced secondments to Barclays Bank PLC and Kaupthing Bank hf.