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Recent events have thrown the spotlight on sanctions. Sanctions provisions in facilities agreements are frequently keenly negotiated, and most lenders have minimum requirements. We typically see lenders focus more on the activities of the obligor group and its business than on the other lenders and finance parties to the transaction.

Accordingly, we anticipate many of our clients revisiting their sanctions policies and giving greater weight to mitigating risks associated with any party to a transaction becoming the subject of sanctions, not just members of the obligor group.

Key Takeaways

  • Facilities Agreements and Secondary Debt Documentation to enhance protections for parties against the imposition of sanctions on their contractual counterparties.
  • Much commentary has been written about the impact on financings of a borrower entity being the subject of sanctions; in this article, we focus on the challenges created for a debt-financing arrangement or a secondary debt trade as a result of a syndicate lender or other finance party, such as the facility agent, being the subject of sanctions.
  • We consider commonplace terms in market-standard facilities agreements to analyze this impact, as well as forms of secondary debt trading documentation that are commonly adopted in the secondary debt trading market.
  • This Spotlight article makes a handful of suggestions as to how documentation may be revisited in the context of sanctions, for example, the introduction of an “Impaired Lender” concept or provisions to facilitate the orderly exit of a Sanctioned Lender from the syndicate. However, these suggestions should be considered on the basis that a variety of commercial drivers specific to each financing dictate how Facilities Agreements and Secondary Debt Documents are drafted.

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*This article first appeared in the September 2022 issue of Butterworths Journal of International Banking and Financial Law.


Luka trained and qualified at another major international law firm before joining Baker McKenzie in September 2009.


James trained and qualified at a major international law firm before joining Baker McKenzie in July 2017. James has completed two secondments at a tier one global bank, sitting in its trade finance legal team. He has also spent time in Dubai, gaining experience in Sharia-compliant financing structures.

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