Legal Aspects of International Finance (LAWS0254)

The module examines the international capital markets and the world of international debt finance.

1.    Overview of the International Debt Capital Markets
Since no prior knowledge of international finance law or the markets is assumed, teaching commences with an overview of the form and contractual structure of debt instruments typically used to raise finance in the international debt finance markets, including the Libor based funding mechanisms used in those markets.  The causes and potential implications of the recent Global Credit Crisis and how the raising of the international finance has been affected by that crisis will also be examined as will the ongoing debate in respect of the recent LIBOR crisis (interest rate setting) and the proposed replacement of that benchmark.  We will also consider the changing nature of the lenders in the international finance markets, in particular, the so-called “shadow banking sector” and the issues arising from the increasing role of such entities.

2.    International term loan agreements
The form and content of international (cross-border) loan agreements including an analysis of the standard (Loan Market Association) form agreements typically used in the London based international finance markets. We will focus, in particular, on the commercial objectives and legal effect of the key clauses included in such agreements including: Conditions Precedent; Representations and Warranties; Covenants; and Events of Default.

3.    Syndicated loan agreements
The form and content of international syndicated loan agreements (multi-bank loans) and an analysis of the roles, obligations and potential liabilities of the various parties thereto including: the Arranger/Lead Manager; Agent Banks; Security Trustees; and syndicate lenders.

4.    Loan transfers
How (and why) are loans transferred? Additional considerations that arise in the context of non-performing loans (NPL’s); methods of transfer: novation, assignment, sub-participation (risk and funded), proceeds assignment and transfers by way of trust. We will also consider the commercial and regulatory drivers for loan transfers and how such transfers are structured and documented.

5.    Project finance
This component will focus on the documentation typically used in project finance transactions and the risks (legal and commercial) such documentation is intended to address. Typical project financing structures will also be examined as will the roles of the various parties in such transactions.

6.    Securitisation and structured finance
This component will focus on classic “true sale” securitisation transactions including the commercial background and regulatory drivers that underpin the securitisation market. The structure of securitisation transactions will be examined in detail as will the role, rights and responsibilities of the various parties including: originators of securitisation transactions; ‘SPV’ styled issuers; arrangers; investors in securitised bonds; liquidity and credit enhancement providers, and third party service providers..  We will also examine the documentation typically entered into to give effect to such transactions.  The impact of the recent Global Credit Crisis on securitisation transactions will be examined in detail, as will recent regulatory developments aimed at addressing some of the perceived weaknesses in the market.  We will also examine the role of the international credit rating agencies.

 7.    International bond issues
This component will examine the process of raising international debt finance via the issue of international bonds; the parties to such issues and the fundamental terms typically incorporated. The legal nature of international bonds will also be examined as will the manner in which they are traded. The role and duties of the bond trustee will also be examined in detail.

8.    Legal opinions
The role of the lawyer in international finance transactions; the form and content of legal opinions commonly delivered in international finance transactions and the potential liabilities for lawyers delivering such opinions.

Recommended materials

Recommended materials
•    McKnight, Paterson and Zakrzewski on ‘The Law of International Finance’ (2nd ed.) (2017), Oxford University Press.  A special print run of this book is produced for students who register for the module at a significantly discounted price.

Module reading lists and other module materials, including standard form documentation typically used in the international finance markets will be provided via online module pages, once students have made their module selections upon enrolment.

Preliminary reading

The following book provides a good introduction to the subject:
•    Colin Paul & Gerald Montagu, Banking and Capital Markets Companion (Sixth Edition 2014), Bloomsbury

Key information