Key provisions in the LMA standard terms and conditions for secondary debt trading
Key provisions in the LMA standard terms and conditions for secondary debt trading

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

  • Key provisions in the LMA standard terms and conditions for secondary debt trading
  • Par trading and distressed trading
  • A trade is a trade
  • Settlement
  • Mandatory settlement obligations and form of purchase
  • The ‘Settlement Amount’ and ‘Delayed Settlement Compensation’
  • Buy-in/Sell-out damages (BISO)
  • Interest
  • Impact of the court's decision in Tael One
  • Breakfunding compensation
  • more

Secondary debt trades in the London market are typically documented through a suite of recommended form of documents produced by the Loan Market Association (LMA) and this Practice Note assumes that the parties to the secondary debt trade have agreed that the trade will be documented using such documents. For more information, see Practice Note: Overview of the key documentation in a typical secondary debt trade.

One of the key documents in the LMA suite is the LMA Standard Terms and Conditions for Par and Distressed Trade Transactions (Bank Debt/Claims) (the LMA Standard Terms and Conditions). Although the LMA Standard Terms and Conditions are incorporated into each trade, it is open to the parties to depart from their terms. Before entering into any trade, the parties should review the LMA Standard Terms and Conditions to determine whether any amendments or additional terms are required for their particular trade. Unless otherwise agreed, the LMA Standard Terms and Conditions will apply to the trade.

The LMA Standard Terms and Conditions apply to each trade by virtue of being incorporated into the trade confirmation, unless otherwise agreed between the parties. For more information, see Practice Note: Secondary debt trading—completing the trade confirmation.

Par trading and distressed trading

The LMA Standard Terms and Conditions can be used for both par trades and distressed