LAWSG033 Legal Aspects of International Finance

LAWSG033: LEGAL ASPECTS OF INTERNATIONAL FINANCE
Credit value: 30 credits (15 ECTS, 300 learning hours)
Convenor: Graham Penn
Other Teachers: Jelena Madir
Teaching Delivery: 20 x 2-hour weekly seminars, 10 seminars per term, Term One and Two
Who may enrol: Any UCL Master’s student
Prerequisites: None
Must not be taken with: None
Qualifying module for: LLM in Corporate Law;
LLM in International Banking and Finance;
LLM in International Commercial Law
Introductory video
Assessment
Practice Assessment: Students may submit an answer to a past examination question to obtain feedback
Final Assessment: One 3-hour unseen written examination (100%)
Module Overview
Module summary: 

The module examines the world of international debt finance.  It focuses on international finance transactions that are used to raise debt finance in the international debt and capital markets. The structure, legal form and content of these instruments are examined in detail, together with the rights and obligations of the various parties involved. Since the vast majority of international debt finance transactions are of a cross-border nature, the international aspects of such transactions will form an important component of the module.  We will also examine the causes of the recent global credit crisis and its impact on the international finance transactions covered by the course.  We will also examine the changing nature of the providers of international debt finance including international investment banks, shadow banks/alternate credit providers, sovereign wealth funds and international finance institutions/multilateral developments institutions like EBRD. The module will also examine the extent to which international banking regulation impacts upon the transactions covered by the module.

Module syllabus:

  1. Overview of the International Finance Markets:

Including the funding mechanisms used in those markets; the causes and potential implications of the recent global credit crisis.

  1. International term loan agreements:

The form and content of international (cross-border) loan agreements including an analysis of the standard (Loan Market Association) form agreements typically used in the London based international finance markets, with particular focus on the objectives and legal effect of: conditions precedent; representations and warranties; covenants; and events of default. Issues arising from the recent LIBOR scandal will also be examined.

  1. Syndicated loan agreements:

The form and content of international syndicated loan agreements and an analysis of the roles, obligations and liabilities of the various parties thereto including: the arranger/lead manager; agent banks; security agents; and syndicate lenders.

  1. Loan Transfers:

How are loans transferred? Methods of transfer under English law: novation, assignment, sub-participation (risk and funded), proceeds assignment and trusts transfers. The commercial and regulatory drivers for loan transfers.

  1. Project Finance:

This component will focus on the documentation typically used in project finance transactions and the risks (legal and commercial) such documentation is intended to address. Typical project financing structures will also be examined as will the roles of the various parties in such transactions.

  1. Securitisation and structured finance:

This component will focus on “true sale” securitisation transactions including the commercial background and regulatory drivers that underpin the securitisation market. The structure of securitisation transactions will be examined in detail as will the role, rights and responsibilities of the various parties thereto. The impact of the recent global credit crisis on securitisation transactions will be examined in detail, as will recent regulatory developments including risk retention requirements, and the legal structure of post credit crisis transactions.

  1. International bond issues:

This component will examine the process of raising international debt finance via the issue of international bonds; the parties to such issues and the fundamental terms typically incorporated. The legal nature of international bonds will also be examined as will the manner in which they are traded. The role and duties of the bond trustee will also be examined in detail.

  1. Subordination and Intercreditor related issues:

This component will focus on the different types of subordination, its legal effect and the commercial objectives. Typical intercreditor agreements used within international finance markets will also be analysed in detail.

  1. Legal opinions:

The role of the lawyer in international finance transactions; the form and content of legal opinions commonly delivered in international finance transactions and the potential liabilities for lawyers delivering such opinions.

Recommended materials:

  • McKnight, ‘The Law of International Finance’

Module reading lists and other module materials will be provided via online module pages, once students have made their module selections upon enrolment.

Preliminary reading:

The following book provides a good introduction to the subject:

  • Colin Paul & Gerald Montagu, Banking and Capital Markets Companion (Sixth Edition 2014).

An excellent introduction to the origins of the recent credit crisis can be found in:

  • Roger McCormick, Legal Risk in the Financial Markets (2010) Oxford University Press.