Conditions precedent in debt capital markets transactions
Conditions precedent in debt capital markets transactions

The following Banking & Finance guidance note provides comprehensive and up to date legal information covering:

  • Conditions precedent in debt capital markets transactions
  • What is a condition precedent?
  • Conditions precedent for standalone issues
  • Conditions precedent for issues under a programme
  • What happens if the conditions precedent are not met?
  • Force majeure

What is a condition precedent?

In many financing transactions, the document containing the commitment to provide finance is signed some time in advance of the date when funds will actually be made available. In such a case the commitment to provide finance will be conditional upon certain conditions being satisfied before funds are advanced. These conditions are known as conditions precedent and are usually satisfied by delivery of specified documents. For information on conditions precedent in bank lending documentation, see Practice Note: Conditions precedent.

In a debt capital markets transaction, the conditions precedent are set out in the subscription agreement (in the case of a standalone issue) or programme agreement (in the case of an issue under a programme). For information on the differences between standalone issues and issues under a programme, see Practice Note: Transaction structures—standalones versus programmes.

There is usually an important additional condition which is not satisfied by delivery of a document—see Force majeure below.

Conditions precedent for standalone issues

The conditions precedent for a standalone issue typically include:

  1. delivery of certified copies of the issuer's (and, if applicable, the guarantor's) constitutional documents, authorising resolutio