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Country risk in unprecedented times: a precedent for cross-border loan documentation?

30 September 2024 / Author(s): Jessica Melville
Issue: October 2024 / Categories: Feature

While country risk cannot be avoided in cross-border transactions entirely, it can be effectively mitigated through careful transaction structuring and tailored contractual protections. Market standard loan agreements will include a number of exit rights and cost recovery provisions which may be helpful to a lender exposed to country risk and can be negotiated to meet the needs of the particular transaction. It is important to strike a balance between the effective management of country risk for lenders, and a contractual framework that provides the borrower with the required economics and flexibility to operate with certainty.

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