Uncertain Economies

Abstract

In light of recent economic downturns in areas such as Asia and Latin America, so-called boilerplate provisions of project loan agreements have come under renewed scrutiny. Mozingo cites several types of boilerplate provisions, using typical loan agreement language, and suggests issue borrowers may want to consider. Examples include provisions that allow lenders to raise borrowing rates when their funding costs increase, disaster clauses allowing lenders to terminate loans under adverse circumstances, definitions of base rates and reference lenders, provisions allowing borrowers to prepay, and events of default only indirectly related to the borrower's creditworthiness.