Jeremy Duffy

2021: the year of the sustainability-linked loan

In this Spotlight article, the authors discuss the recent updates to the Sustainability-Linked Loan Principles (SLLPs) and the way in which the newly published Best Practice Guide (Guide) complements them, before examining how the market has incorporated ESG provisions into leveraged loans and the related issues that borrowers and lenders will need to consider.

Fund finance and sustainability: new guidance on the application of the SLLPs

Over recent years there has been significant growth and development in the fund finance industry, which has expanded over the last decade into a global market now worth more than US$600bn, according to the asset manager abrdn. As the market has continue to mature, the variety of tools available to investors (which include private equity, private credit and venture capital) to fund their operations has expanded considerably beyond the traditional subscription facility to encompass many more types of fund financing. One such innovation has been the introduction and adoption of sustainable finance, either by the way of use of proceeds facilities (green loans) or sustainability-linked loan facilities.

In light of the increased use of ESG-linked financing in the fund finance market, on 5 March 2024 the Loan Market Association, Asia Pacific Loan Market Association, Loan Syndications and Trading Association and the Fund Finance Association published 'A Guide to the Application of the Sustainability Linked Loan Principles in Fund Finance' (Guide), which provides practical guidance to market participants on how the Sustainability Linked Loan Principles can be used the fund finance market, as well as identifying and addressing challenges and considerations  particular to fund finance transactions.

In this article we will examine the use of sustainability-linked financing in the fund finance market and consider some of the issues raised by the Guide.

Documenting SLLs: a comparison of the LMA/LSTA approach to sustainability provisions

In this article the authors consider the more interesting provisions in the standard sustainability-linked loan riders recently published by the Loan Market Association (LMA) and the US’ Loan Syndications and Trading Association (LSTA) and compare and contrast the approach they have taken.