As part of their current exodus from the syndicated lending market, lenders are outsourcing loan administration to third parties. An agent with no stake in the loan will usually have little intimate knowledge of the facility he is administering. Yet, if the loan fails, a distressed borrower is not an attractive target. An agent is. So what are the agent’s main exposures? More importantly, how well do the Loan Market Association (LMA) standard terms address them? The answer is: relatively well; but a prudent agent will seek additional terms to try to enhance his contractual protection and will take several practical steps to minimise any residual risk.

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