Syndicated credit agreements often provide that syndicate member banks may enter into bilateral swaps and derivatives transactions with the borrower, and that any resulting credit exposure will be secured by the collateral and backed by the guaranties supporting the credit agreement. The swaps extended to the borrower may include interest rate hedges in respect of the syndicated loan itself, foreign exchange hedges relating either to the loan facility or generally to the borrower’s business, or commodity hedges protecting the borrower from fluctuations in commodity-related expenses or revenues, among others. Ordinarily, the resulting swaps will be governed by the ISDA Master Agreement, as modified by an agreed form of ISDA Schedule.

Download the .PDF to learn more!