Guidance will help borrowers, lenders, and advisers in applying Sustainability Linked Loan Principles.

By Paul Davies, Karan Chopra, Edward Kempson, and Sindhoo Vinod

On 28 July 2021, the Loan Market Association (LMA) and European Leveraged Finance Association (ELFA) published a best practice guide (the Guide) to Sustainability Linked Leveraged Loans (SLLLs). The Guide provides practical guidance for market participants on the application of the Sustainability Linked Loan Principles (SLLPs) to leveraged loans, particularly loans made at portfolio company level. ELFA and the LMA deemed the Guide necessary given the increasing prevalence of sustainability linked financings in the leveraged loan market.

The Guide is intended to assist borrowers, lenders, and advisers when considering the integration of sustainability factors in leveraged loan documents, and should be read alongside the SLLPs and the LMA Guidance on the Sustainability Linked Loan Principles. These complementary documents were updated in May 2021 to reflect progression in the market and to ensure alignment with the International Capital Market Association’s (ICMA’s) Sustainability Linked Bond Principles.