Overview of the key documentation in a typical secondary debt trade
Produced in partnership with K&L Gates
Overview of the key documentation in a typical secondary debt trade

The following Banking & Finance guidance note Produced in partnership with K&L Gates provides comprehensive and up to date legal information covering:

  • Overview of the key documentation in a typical secondary debt trade
  • The LMA suite of documents for secondary trades
  • Confidentiality letters
  • Trade confirmation
  • LMA Standard Terms and Conditions
  • Transfer agreements and assignment agreements
  • Sub-participation agreements
  • LMA user guide and other documents

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). The LMA secondary debt trading documentation was produced with the aim of standardising and simplifying the sale of loan assets and establishing a standard settlement process. The use of standardised documentation also improves liquidity in the Secondary loan market. The documents can be used as a starting point for negotiations and should be amended as required to tailor them to the specific requirements of a transaction.

This Practice Note provides a summary of the principal documents included within the LMA suite of documentation for secondary debt trading.

In the New York market, the Loan Syndications and Trading Association (LSTA) performs a similar role to the LMA. This Practice Note does not cover the LSTA standard documentation for secondary trading.

The LMA suite of documents for secondary trades

The key documents are:

  1. confidentiality letters

  2. trade confirmations

  3. the LMA standard terms and conditions for par and distressed trade transactions (bank debt/claims)

  4. the forms of purchase agreement:

    1. transfer agreements and assignment agreements, and

    2. sub-participation agreements

The LMA secondary trading documents are intended to be used as a suite and therefore care should be exercised if using individual documents in isolation.

The LMA trading documentation distinguishes between trades based upon:

  1. whether