Loan Market Association mandate letter—commentary
Loan Market Association mandate letter—commentary

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

  • Loan Market Association mandate letter—commentary
  • When are mandate letters used?
  • Preamble
  • Definitions
  • Appointment
  • Conditions
  • Underwriting proportions
  • Material Adverse Change
  • Clear Market
  • Market Flex
  • more

When are mandate letters used?

Mandate letters are typically signed at the start of a transaction, and are often attached to an agreed term sheet. They are most typically seen in syndicated transactions, and their purpose is to set out the terms of the engagement between the borrower and the lenders which will be leading the syndication process for the transaction (the Mandated Lead Arrangers or MLAs). They also set out the agreed strategy for syndicating the debt.

For more information, see Practice Notes: Mandate letters and Drafting and negotiating mandate letters in loan transactions.

The Loan Market Association (LMA) has two forms of mandate letter: underwritten and best efforts. Members can access these documents on the LMA website.

In an underwritten mandate letter, the underwriters (which are often the same parties as the MLAs) agree that they will lend a certain proportion of the required debt (which in aggregate is enough to fund the total amount required) whether they are able to find other lenders to participate or not.

In a best efforts mandate letter, the MLAs simply agree that they will use their best efforts to try to find enough lenders to lend, in aggregate, the amount that the borrower is looking for.

The form of the mandate is a letter from the MLAs and other parties