- if the consent of the borrower is required for an assignment or novation;
- if assignment or novation is permitted but is unlikely to be obtained (for example in the borrower’s insolvency);
- if the proposed transferee is prohibited from being a lender of record because it is not a permitted transferee under the loan agreement (see previous discussion in section 4 above);
- if the proposed transferee is prohibited from being a lender of record for regulatory reasons;
- if the proposed transferee would give rise to a withholding tax liability ie it does not fall within the “qualifying lender” definition; or
- remove the risk relating to the loan from the lenders balance sheet. However, whether a participation achieves off-balance sheet accounting treatment will depend on the application of the relevant accounting standards; or
- if the transfer of a loan mid-interest period would trigger a break funding cost.
William A.J. Higgs PhD