Lehman provisions and SONIA: Difference between pages

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''Borrowing and lending - documentation - finance party default - Loan Market Association (LMA).''
Sterling Overnight Index Average.


Lehman provisions are parts of loan agreements designed to address the risk of default by a lender or an agent bank.
Tracks actual average market sterling funding rates each day for settlement that day where repayment is made on the following business day.  


:<span style="color:#4B0082">'''''Commentary on the Lehman provisions'''''</span>
It is published by the Wholesale Markets Brokers' Association (WMBA) in London at 5pm each day.


:"The risk of finance party default under a loan agreement is a risk factor that the loan market moved swiftly to address following the collapse of Lehman Brothers.  
It is defined and calculated as the weighted average rate (to four decimal places) of all unsecured sterling overnight cash transactions brokered in London by WMBA member firms between midnight and 4.15pm London time with all counterparties in a minimum deal size of £25 million.
 
:The LMA’s response was to create a set of optional 'Finance Party Default' clauses, which were first published in 2009.  These are often colloquially referred to as the 'Lehman provisions'...
 
 
:Most of the Lehman provisions are a welcome addition to facility documentation for borrowers.
 
:They are widely used and, generally speaking, the main concepts addressed by the LMA drafting will be familiar to those who have negotiated loan documentation since 2009.
 
:This might suggest that the most commonly used aspects should be incorporated into the Investment Grade Agreements..."
 
:''The ACT Borrower’s Guide to the LMA’s Investment Grade Agreements - 6th edition - 2022 - p377.''




== See also ==
== See also ==
* [[Default]]
* [[Euro Overnight Index Average ]]
* [[Defaulting lender]]
* [[EURONIA]]
* [[Documentation]]
* [[Over night index average rate]]
* [[Event of default]]
* [[Overnight indexed swap]]
* [[Facility]]
* [[Sterling overnight index average]]
* [[Finance party default]]
* [[Wholesale Markets Brokers' Association]]
* [[Impaired agent]]
* [[Investment Grade Agreements]]
* [[Lehman ]]
* [[Loan agreement]]
* [[Loan Market Association]] (LMA)
* [[Provision]]
 


==Other resource==


* [https://www.treasurers.org/best-practice/borrowers-guide-LMA-investment-grade-agreements The ACT Borrower’s Guide to the LMA’s Investment Grade Agreements - 2022 - p377]
==External links==


[[Category:Accounting,_tax_and_regulation]]
[http://www.wmba.org.uk/pages/index.cfm?page_id=31 Wholesale Market Brokers' Association (WMBA)]
[[Category:The_business_context]]
[[Category:Corporate_finance]]
[[Category:Investment]]
[[Category:Long_term_funding]]
[[Category:Identify_and_assess_risks]]
[[Category:Manage_risks]]
[[Category:Risk_frameworks]]
[[Category:Risk_reporting]]
[[Category:Cash_management]]
[[Category:Financial_products_and_markets]]
[[Category:Liquidity_management]]

Revision as of 13:49, 20 August 2013

Sterling Overnight Index Average.

Tracks actual average market sterling funding rates each day for settlement that day where repayment is made on the following business day.

It is published by the Wholesale Markets Brokers' Association (WMBA) in London at 5pm each day.

It is defined and calculated as the weighted average rate (to four decimal places) of all unsecured sterling overnight cash transactions brokered in London by WMBA member firms between midnight and 4.15pm London time with all counterparties in a minimum deal size of £25 million.


See also


External links

Wholesale Market Brokers' Association (WMBA)

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