With the cessation of LIBOR and the transition to alternative reference rates, BAFT has prepared amendment agreements to the English Law and New York Law Master Participation Agreements (MPAs).
WASHINGTON — As the trade finance industry prepares for the cessation of LIBOR and the transition to alternative reference rates, BAFT together with ITFA and Sullivan & Worcester have prepared amendment agreements to the 2008 (English Law), 2010 (New York Law), 2018 (English Law) and 2019 (New York Law) Master Participation Agreements (MPAs). Access the new amendment agreements here.
“The suite of MPAs are industry standard documents that are used by banks and their counterparties around the globe to facilitate the buying and selling of country and bank trade-related assets.” said Tod Burwell, President & CEO of BAFT, “Updating the widely used MPAs is an important element for trade finance to swiftly transition to alternative reference rates.”
“The LIBOR transition touches multiple areas of trade finance not least distribution. Producing a simple and commercially rational solution for one of the most widely used documents in distribution, the MPA, was therefore crucial. I am therefore very pleased that the two associations, BAFT and ITFA, working with law firm Sullivan & Worcester were able to produce this timely document.” said Sean Edwards, Chairman of ITFA.
The amendment agreements can be used to make the changes to existing MPAs as well as for new agreements. The approach taken is to replace the references to LIBOR by references to relevant central bank rates for those 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 e.g. bail-in.
Geoffrey Wynne, Partner & Head of Trade and Export Finance Group at Sullivan & Worcester said, “With the direction of those involved at BAFT and ITFA we have provided a pragmatic solution covering how to change all the existing BAFT MPAs where new ones are entered into, and Amendment Agreements to amend the existing ones where they are continuing. We hope market participants will find these useful.”
It is important to note that 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. For those wishing to enter into fresh agreements reflecting the changes and for new MPAs in the future, updated versions of the various BAFT MPAs are available for members and non-members here.
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