UCL Faculty of Laws


Legal Aspects of International Finance (LAWS0254)

This module focuses on the major international debt finance transactions entered into by investment banks, corporate borrowers and, increasingly, multi strategy private equity platforms and other alternate credit providers, often referred to as “the ‘shadow banking’ sector” who play an active role in the critically important global debt finance markets which have been developed in London, New York and Tokyo and, more recently, in Hong Kong, Singapore and Frankfurt.  It is designed to provide an in depth understanding of the legal structures used in these transactions and the legal and regulatory issues that arise.  The debt finance transactions focused upon include: Primary and Secondary Market Loan Agreements (bi-lateral and syndicated); Bond Issues; Project Finance; Derivatives; and Securitisations.

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The module convenor is an internationally recognised authority in international debt finance who has both practiced in the area, as a partner and global practice leader at one of the world’s largest international law firms, and taught the subject matter covered by the module to academics and practitioners for many years.  He has been consistently recognised as a top tier lawyer by Chambers (UK and international) who also included him in their inaugural Chambers 100, which ranked the top 100 business lawyers in the UK, where he was listed as one of the top five capital markets lawyers.  He has worked on many landmark and ground breaking international finance transactions in numerous jurisdictions.  He originally established the module at UCL and has convened the course ever since.  Teaching on this module is international in outlook and current market practice-oriented whilst at the same time providing high levels of academic rigour and critical analysis.  Teaching will be based on market standard documentation currently used in the international debt finance markets and those who study this module will become very familiar with the content and legal issues arising from the use of such documents.

Module syllabus

  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 funding mechanisms used in those markets.  The causes and potential implications of the relatively recent Global Credit Crisis and how the raising of the international debt 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 replacement of that benchmark.  We will also consider the significance of the changing nature of the lenders in the international finance markets, in particular, the so-called ‘alternate credit and capital providers’ (primarily funds).  Current developments, for example, the increasing importance of ESG (Environmental, Sustainable and Governance) margin ratchets in debt finance will also be covered.

  1. International term loan agreements

The form and content of international (cross-border) term 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; Interest Rate and drawdown mechanics; Representations and Warranties; Covenants; and Events of Default.

  1. 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.

  1. Loan transfers

How (and why) are loans regularly transferred in the secondary loan market? Additional considerations that arise in the context of non-performing loans (NPL’s); the methods of transfer typically used in the market: 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; why liquidity in this market is important and how loan transfers are structured and documented.

  1. 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.

  1. 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 and the Covid pandemic 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. 

  1. 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.

  1. 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

  • McKnight, Paterson and Zakrzewski on ‘The Law of International Finance’ (2nd ed.) (2017), Oxford University Press. 

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

Module details
Credit value:45 credits (450 learning hours)

Graham Penn

Professor of International Finance Law at UCL and partner at Sidley Austin LLP

Other Teachers:

Alex Mills

Teaching Delivery:20 x 2-hour weekly seminars, 10 seminars per term, Term One and Two.  4 x 1 hour tutorials, 2 tutorials in each of Term One and Two
Who may enrol:LLM Students Only
Must not be taken with:None
Qualifying module for:

LLM in Corporate Law

LLM in International Banking and Finance Law

LLM in International Commerical Law

Practice Assessment:Students must submit two x 1500 word answers (one in each of the first and second terms) to a past examination question to obtain feedback and guidance
Final Assessment:Controlled Condition Exam (100%)