Lenders in the speciality finance space make available debt facilities to financial institution borrowers (for example, SME lenders, mortgage providers and auto financiers) in order to refinance (in part) loans originated by those borrowers to their underlying customers. Facilities are secured over, amongst other assets, the borrowers’ rights in respect of the loans they make to their underlying customers. Over recent months, facility documentation entered into by those lenders and borrowers has come under intense scrutiny, with market participants having to react to the unprecedented and changing market pressures arising as a result of the COVID-19 pandemic. In this article, we explore the considerations for both lenders and borrowers as they navigate this uncharted territory.
This article first appeared in the July / August 2020 edition of Butterworths Journal of International Banking & Financial Law.