Leveraged vs investment grade facility agreement — similarities and differences

Leveraged finance syndicated facility agreements typically follow (if one adopts a helicopter view) the same basic structure as a corporate syndicated facility agreement. However, there are key differences to better reflect:

• • the essentially limited recourse nature of the facilities;
• • the higher risk profile of leveraged facilities (reflected in the inclusion of provisions to monitor and control activities of the group and mandatorily reduce debt (and therefore the refinancing risk for the lender given the group's amount of debt)); and
• • the security and guarantees and undertakings that material companies in the group, especially the target group, will be required to provide.

This guidance note highlights the main similarities and differences when comparing leveraged and investment grade facility agreements.

See Leveraged vs. investment grade facility agreement — similarities and differences.