LMA publishes guidance on documentary considerations when dealing with sovereign obligors

07 June 2024

On 7 June 2024, the LMA is pleased to have published a guidance note which sets out documentary considerations when dealing with a sovereign borrower or guarantor. 

The guidance has been produced following demand from LMA members, partly driven by recent experiences in the market in respect of sovereign distress cases.

The guidance note is intended to be a helpful tool for lenders, investors, borrowers and advisers of the relevant considerations in the context of dealing with sovereign obligors (which includes for these purposes a state-owned entity). 

In particular, the guidance note covers considerations in respect of: mandates and syndication; application of payments across multi-source financings; export credit agencies; majority voting provisions for debt restructurings; immunity, and other key considerations. The guidance also identifies areas of a facility agreement (based on one of the LMA documentation suite) that would typically need to be amended for a sovereign financing as well as identifying additional protections which might be included. 

In producing this guidance, the LMA has worked with both of its Developing Markets and Export Finance Working Parties and would like to thank them both for their engagement and insight. The guidance therefore benefits from a range of views from commercial banks, export credit agencies and advisers across EMEA. 

We hope that this will be a helpful tool for the market to drive understanding, liquidity and efficiency.   

The guidance note has been made available on the LMA website under the Issues and Guidance section of the Documents Index. Alternatively, the note can also be found on both the Export Finance and Developing Markets sections of the Documents Index webpage. For our African Single Jurisdiction members, the note can also be found under the Issues and Guidance section of the Documents tab.