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Overview Of Debt Agreements Outline

LLM Law Outlines > Corporate Bonds and Credit Agreement Outlines

This is an extract of our Overview Of Debt Agreements document, which we sell as part of our Corporate Bonds and Credit Agreement Outlines collection written by the top tier of NYU School Of Law students.

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01. Introduction and Overview of Debt Agreements
Introduction
- 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
 one bank
 syndicate

types
 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

Debt Securities

Often issued publicly and traded

Multiple holders of bonds of same issue
 Insurance companies
 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).
- Comparison

Corporate Bonds
 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
 public placement
 larger number of holders
 trading frequently

trading/ assignment in credit agreement
 private placement
 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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