6 July 2017 

PRESS RELEASE: LMA launches template Italian law private placement documentation

The LMA is pleased to announce that it has launched template documents for use in Italian private placement transactions (the “Italian PP Documents”). The LMA project to develop the Italian PP Documents was commenced in response to demand from LMA members active in the Italian private placement market, who were keen to promote the development of this product as a viable financing tool in Italy. It is hoped that standardisation of Italian law documentation will assist in creating a more unified and efficient private placement market. The Italian PP Documents launched today are the following:

1. a recommended form of facility agreement for use in Italian law private placement transactions (the “Italian PP Facility Agreement”);

2. a recommended form of subscription agreement for use in Italian law private placement transactions (the “Italian PP Subscription Agreement”);

and 3. an associated User Guide.

It was recognised that private placements in Italy currently take varying forms, some of which are loan facilities extended by domestic and EU AIFs and some of which are note issuances. LMA members participating in this market felt that the formulation of standard form templates incorporating both a loan and a note option would be a big step forward in achieving greater efficiencies by providing a common framework and language for those involved in these transactions.

The Italian PP Documents are governed by Italian law and assume the transaction is unsecured and with an investment grade company as borrower/issuer. The LMA believes that they will form a useful starting point for a wide range of transactions and will enable market participants to concentrate on the key commercial drivers and structural provisions which form the basis of their transactions. It is also hoped that the initiative will help to unlock new sources of liquidity and reduce perceived barriers to entry.

The LMA, along with the law firms Allen and Overy, Clifford Chance and Grimaldi (who participated on the working party for the project and co-drafted the templates), will be offering training on the Italian PP Documents for its members as part of its wide-ranging events programme in both London and Milan. Commenting on the launch, Clare Dawson, LMA Chief Executive, said: “In view of our substantial recognition in the market as a provider of template loan and private placement documentation, we felt that we were well placed to assist the market with this project. It is our hope that these Italian law templates will benefit issuers and investors, whether established or new to the market, in the same way as our English law private placement documentation has assisted participants entering into English law documentation.” “The creation of a suite of Italian law private placement documents is further evidence of the LMA’s ongoing commitment to fostering market growth and liquidity throughout EMEA. It will be a very welcome addition to our existing suite of documents.” Commenting on the documents, Riccardo Sallustio, Partner, Grimaldi, said: “The Italian private placement market is one of the largest in Europe. The Italian PP Documents and the related guide have been prepared in response to a specific need to standardise Italian law governed documentation and to offer international funds and institutional investors, as well as Italian issuers and borrowers, a balanced and reasonable starting point when negotiating privately placed debt transactions.” For further information, please see the appendix below.

1. Why has the LMA produced Italian law private placement documentation? The project was begun in response to demand from participants in the Italian private placement market. It was felt that the lack of standardised documentation was one of the barriers to growth of the market. It was also seen as important to base the documentation on existing LMA loan templates on the basis that LMA documentation is already very well known across the market, particularly by corporate borrowers. This is also why the PP Subscription Agreement follows the format of the PP Facility Agreement, save to the extent necessary to incorporate any structural and legal variations between the two.

2. Why has the LMA produced both a loan and note version? It was recognised early on in the process that market participants wanted documentation that accommodated both loans and notes. It was also considered important that the style of the documentation and the key commercial elements for both formats were as similar as possible. This was to enable investors and borrowers to select the most appropriate format for their individual transaction, based on structural, rather than commercial preferences.

3. To what extent do the private placement documents look like typical LMA documents? All the standard sections of a syndicated facility agreement are included in the Italian PP Facility Agreement and (with appropriate changes to account for the different structure and Italian regulatory requirements) the Italian PP Subscription Agreement, other than agency and arranger provisions. In addition, where provisions are likely to be deal specific so that no common starting point can easily be identified, spaces have been left or options provided. Examples of these provisions include the “make whole amount”/”prepayment fee” clause, the financial covenants and the “more favourable terms” clause. Further discussion of these clauses is however included in the accompanying users guide.

4. Is the note version suitable for other types of bond issuance? No. A number of the provisions included in the note document are not typically seen in the public notes market. The note version is therefore unlikely to be suitable for use on a Eurobond transaction, or where the notes are listed or held in a clearing system.

5. Under what assumptions have the Italian PP Documents been drafted? The documentation has been produced on the basis of various assumptions set out below, made in order to avoid overcomplicating the documents. In summary, the Italian PP Documents assume: • there is one company which will borrow/issue the debt and the debt is guaranteed by a number of its subsidiaries; • the Obligors are companies; • there is no facility agent. The Italian PP Documents do, however, include options for a Paying Agent or a Calculation Agent if these are required; • there is no arranger; • the Loan or Notes are either subject to (i) interest at a fixed percentage rate per annum or (ii) interest at a floating rate per annum which uses LIBOR or EURIBOR as a benchmark; • the lenders or subscribers and holders are based in Italy; • the Obligors are incorporated in Italy; • the facility or notes made available under the Italian PP Documents are unsecured and the Company is of an investment grade credit rating; and • the transaction is governed by Italian law.

6. Why do you expect the Italian PP Documents to be adopted by market participants? LMA documentation is widely recognised within the corporate loan markets as a good basis for negotiation, and the LMA’s documentation for use in both private placements and syndicated loan transactions is already widely used. It is therefore anticipated that the Italian PP Documents will be embraced in the same way as other LMA documents.

7. What benefits will the Italian PP Documents bring to the market? The Italian PP Documents will bring numerous benefits to the market.

Firstly, increased efficiency will result from the standardisation of boilerplate terms and provision of a common and recognisable legal framework, with the ultimate aim of improving liquidity in the market. A lack of standardisation can lead to increased negotiation and time taken for transactions to complete. Such increased negotiations and completion times could also make a market less attractive to new investors.

Secondly, the LMA reviews its documents on a regular basis, thus ensuring that they reflect current market practice, accommodate the regulatory and legal framework and continue to meet the needs of participants in the market. Thirdly, simultaneously with the launch of the Italian PP Documents, the LMA has also published a detailed Users Guide to provide additional guidance and to further assist users with the drafting process.

Finally, the LMA will hold a series of training events and seminars on the Italian PP Documents, both in London and Milan. 8. How does the LMA initiative fit with other private placement initiatives running concurrently in Europe? The LMA has been working with a wide variety of market participants, trade associations and government bodies so that its initiative is aligned with that of others. The LMA is supportive of all such initiatives on the basis that they share the same underlying objective: to improve liquidity for the private placement product and to attract new investors and borrowers to the market. The LMA sees its private placement documents and those produced by other organisations as being complementary, and targeted at different market participants. The objective is to offer a range of tools to market participants in an emerging European market. It is envisaged that investors and borrowers will choose the most appropriate document for their purposes and that as market practice evolves and the product itself becomes more international in nature, the documentation will evolve appropriately.

See also:

16 February 2016

EU and Italian ‘funds’ now allowed to engage in direct lending to Italian businesses

On 16 February 2016, a set of Italian Government measures became effective following the publication of the long awaited Law Decree no. 18 of 14 February 2016. In particular, these measures cover the disposal of non-performing loans by Italian banks and provide new rules outlining for the first time the ability of Italian alternative investment funds (AIFs) and EU AIFs, subject to certain conditions, to engage in direct lending in Italy. This has been hailed as a real breakthrough, which could potentially open up the Italian direct lending market through credit funds. Clifford Chance has prepared a briefing paper discussing the new rules:

28 May 2015

EU PPA board member gives interview to Banking Review

Arnold Gast, head of credits at Delta Lloyd Assetmanagement and one of the board members of the European Private Placement Association, gave an interview for Banking Review about the European private placement market on the occasion of the Pan-European Private Debt Forum that will take place on 23 June 2015 and is organised by IIR and the European Private Placement Association (EU PPA).

Banking Review:

28 May 2015

European Private Placement Association’s recommendations regarding the European Commissions’ Green Paper on Building Capital Markets Union (CMU)

On 12 May 2015 the European Private Placement Association submitted its recommendations (EUPPA response CMU) to the DG Financial Stability, Financial Services and Capital Markets Union Unit C1 (Capital markets union) regarding the European Commissions’ Green Paper on Building Capital Markets Union (CMU).

26 March 2015

UK Withholding Tax Exemption – New draft legislation published

Further to the UK Government’s announcement last year that it intended to introduce a new withholding tax exemption for private placements, new draft legislation was published this week in the form of the Government’s Finance Bill.

The new draft legislation sets out the following requirements for a debt to qualify as a “qualifying private placement”. It must be a “security”:

  • which represents a loan relationship to which a company is a party as debtor
  • which is not listed on a recognised stock exchange and
  • in relation to which such other conditions as the Treasury may specify by regulations are met.

The big question which the new draft legislation leaves open is what additional conditions will be included in any regulations issued by the Treasury. None have yet been published but the new draft legislation sets out a non-exhaustive list of what regulations might address, including:

  • the security itself
  • the loan relationship represented by the security
  • the terms on which, or circumstances under which, the security or loan relationship is entered into
  • the company which is party to the loan relationship as debtor
  • any person by or through whom a payment of interest on the security is made or
  • the holder of the security.

As mentioned in our letter to HM Treasury of 27 February, there remain a number of issues to be addressed in order to ensure that this exemption works in the way EU PPA would like it to work. The good news is that we have received indications that the following limitations we identified as problematic will be dropped from the regulations, namely:

  • that the exemption will apply only to notes/bonds and not to loans
  • that investors are not required to be regulated persons
  • the ongoing status certification requirement for investors and
  • the minimum/maximum size.

However, it seems likely that two key restrictions will remain, namely:

  • that investors cannot be tax haven entities and
  • that the issuer must be a trading company or part of a trading group (or an SPV that funds a trading company/group).

If you would like to discuss this initiative with us, or would like to find out more about our activities concerning the development of the pan-European Private Placement market, please contact us.

2 March 2015

Withholding tax on private placements – European Private Placement Association lobbies UK government

On 3 December last year the UK Government announced that it will introduce legislation to amend the rules on withholding tax where the interest is paid on ‘qualifying private placements’. Here is a link to the Technical Note published by HMRC on 10 December.


A consultation process was initiated which ended last week. The European Private Placement Association has engaged in this process, highlighting the following important issues that we believe need to be addressed in order to better reflect the way the private placement market operates and to ensure that the UK Government proposal does not lead to the development of a market fragmented between UK and non-UK deals. For example:


  • the requirement that a qualifying private placements take the form of note issuances rather than “loans”;
  • the suggestion that investors must be regulated persons whilst some classes of investors may not be;
  • the requirement that issuers are carrying on a trade and that the securities be a “loan relationship of a company” which is in our view too narrow and too technical and limits the ability to seek private placement funding indirectly through an SPV or holding company;
  • the requirement that interest be at a “normal commercial rate” which we believe is too technical and potentially difficult for investors to assess;
  • the 3 year minimum term in the context of mandatory repayment provisions; and
  • the maximum issuance by an individual company of £300m.

A full copy of the letter which was sent to HMRC can be found here: EUPPA WHT Submission.

23 February 2015

European Commission Green Paper – Building a Capital Markets Union

Last week the European Commission published its Green Paper on Capital Markets Union (CMU). One of the stated aims of the Commission is to put in place a pan-European private placement regime. The Commission is seeking feedback from market parties through a three month consultation process. The European Private Placement Association will be energetically engaging in this consultation process and we encourage all interested parties to join with us in taking this excellent opportunity to help develop and shape the future of the pan-European Private Placement market.

13 February 2015

The Pan-European Corporate Private Placement Market Guide

The Pan-European Private Placement Working Group (the “PEPP Working Group”) has launched the Pan-European Corporate Private Placement Market Guide. The European Private Placement Association is a member of the PEPP Working Group which is led by ICMA and includes AFME, the French Euro Private Placement (Euro PP) Working Group, the LMA, TheCityUK and The Investment Association. 


The Guide sets out a voluntary framework for common market standards and best practices which are essential for the development of a Pan-European Private Placement market aimed at providing medium to long term finance to European mid-sized companies. It is expected that the Guide will:


1) Expand cost-effective funding opportunities for European mid-sized companies;

2) Grow the European investor base for private placement transactions; and

3) Lower operation costs by promoting the use of standardised private placement transaction documentation.


Click here for the Pan-European Corporate Private Placement Market Guide.