Global law firm Sullivan has advised two prominent trade finance associations on key amendments to master participation agreements (MPAs).
The new changes to the MPAs reflect the cessation of the London Interbank Offered Rate (LIBOR), which was retired for new contracts across a range of currencies on December 31, 2021.
Through its Market Practice Committee, Sullivan worked with the Bankers Association for Finance and Trade (BAFT), and the International Trade and Forfaiting Association (ITFA), on key amendments to the following documents:
- BAFT Master Participation Agreement 2008 English Law
- Form of Amendment Agreement to 2008 English Law MPA
- BAFT Master Participation Agreement 2018 English Law
- Form of Amendment Agreement to 2018 English Law MPA
- BAFT Master Participation Agreement 2010 (New York Law)
- Form of Amendment Agreement to 2010 New York Law MPA
- BAFT Master Participation Agreement 2019 (New York Law)
- Form of Amendment Agreement to 2019 New York Law MPA
The suite of MPAs are industry-standard documents used by banks and their counterparties around the globe to facilitate the buying and selling of country and bank trade-related assets.
They have been updated as the trade finance industry transitions to alternative risk-free reference term rates (RFRs), following the cessation of LIBOR.
The amendment agreements can be used to make changes to existing MPAs. For those wishing to enter into new agreements reflecting the changes, and for new MPAs in the future, updated versions of the various MPAs are available.
The approach taken aims to replace the references to LIBOR with references to relevant central bank rates in currencies for which LIBOR is currently quoted.
The changes only deal with LIBOR replacement and not with any other issues or developments since each MPA was published.
The amendment agreements do not amend the rate in any participated transactions, and only in the MPA itself. Participated transactions can use a variety of rates, as specified in an Offer.
Geoffrey Wynne, head of the Trade and Export Finance Group at Sullivan, said: “The MPAs help those active in the trade finance market to keep trade finance flowing internationally, and are vital documents for those negotiating and agreeing the sale and purchase of trade-related assets.
“Sullivan is delighted to have advised BAFT and ITFA on these essential industry documents, again, involving lawyers from our team in both New York and London, illustrating the strength of our international trade finance team.”
In June last year, TFG published a LIBOR Transition Hub in partnership with ITFA. To learn more, click here.