LLM Law Outlines > Corporate Bonds and Credit Agreement Outlines
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01. Introduction and Overview of Debt Agreements
- Corporate bonds and Credit Agreements involve large loans to corporations
- Class is about the contractual provisions of these lending arrangements
macro perspective: general purpose
micro perspective: how clauses should be constructed, exceptions
nano perspective: is expression ambiguous, does the literal meaning conforms what we intended
- Credit Agreements
typically/ mostly with banks
term loan: due on a specific date
revolvers: co. can borrow and repay up to a certain amount (line of credit)
difficult to transfer your participation to another bank
letters of credit: co. handle payment for goods purchased, future obligation
credit facilities: multiple types of agreement
- Corporate Bonds
Often issued publicly and traded
Multiple holders of bonds of same issue
Other institutional investors
Few retail investors
Indenture and Certificate
Some bonds are "private placements:" not publicly issued, less trading, usually no
"indenture" but Note Purchase Agreement (or so).
Holdings tend to be more dispersed than Lenders in Credit Agreement
Trading is more frequent than trading/assignment in Credit Agreement
To the extent Credit Facility involves ongoing obligations of lenders (as in revolver, letter of credit), assignment is difficult.
Not doable via bonds.
o Interest rate variable versus fixed
Variable: revolvers tied to market rate, LIBOR (determined by a no. of banks)
o trading in corporate bonds
larger number of holders
trading/ assignment in credit agreement
lower no. of creditors, little or no trading
- Focus of the Course
Study contractual provisions in agreements through Problem Sets
What is purpose of provisions?
How do provisions within one agreement relate to other provisions in same agreement?
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