• Impact of Dodd-Frank Swap Regulations on Guaranties and Loan Documentation
  • May 27, 2013 | Authors: Steven S. Grieco; W. Kent Ihrig
  • Law Firm: Shumaker, Loop & Kendrick, LLP - Tampa Office
  • Often in connection with commercial loans, borrowers will enter into hedging transactions (“swaps”) for the purpose of mitigating interest rate, commodity or currency risk. Such swaps will frequently be entered into directly with the borrower’s lender or an affiliate of the lender or, in a syndicated or club loan transaction, one of the syndicate lenders (or an affiliate of such syndicate lender). In such circumstances, lenders will typically require that guarantors of the loan (including borrower subsidiaries and/or affiliates), and the collateral securing the loan, also provide support for the borrower’s obligations under swaps entered into with the lender and/or an affiliate of such lender. Recent interpretative rules related to the implementation of Dodd-Frank have significant implications with respect to the documents governing such loan transactions.