Ratchet

1. Loan documentation - pricing - credit risk - credit ratings.

A clause in a loan document which links the pricing of the borrowing to the credit rating of the borrower.

Also known as a 'pricing grid'.

2. Loan documentation - pricing - ESG - KPIs.

A clause in a loan document which links the pricing of the borrowing to the borrower's performance against ESG performance KPIs.

Places for People's (PfP's) £900m ESG-linked RCF

"PfP agreed on three meaningful and stretching environmental and social KPIs aligned with four of the UN Sustainable Development Goals.

These are documented in line with the LMA’s Sustainability-Linked Loan Principles with performance tied to upward and downward margin ratchets."

ACT Deals of the Year 2022: Overall winner - 4 April 2023.

See also