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Market Trends 2021/22: Commitment Letter Provisions

October 25, 2022

Review the market trends in commitment letter provisions. This practice note discusses current market trends in publicly filed financing commitment letters from the second half of 2021 and the first half of 2022. The data analyzed in this practice note was obtained using Market Standards, which contains over 475 publicly filed commitment letters from 2017 to the present.

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  • Commitment Letter and Term Sheet Provisions
    Read this practice note to understand the commitment letter and term sheet and how they relate to a financing transaction. It details the main provisions of these documents, including those specific to acquisition financing, and how they are typically negotiated.
  • Commitment Letter (Fully Underwritten Commitment)
    Check out this template commitment letter evidencing a bank’s commitment to provide the full amount of a loan to a borrower. This is a fully underwritten commitment, not a partially underwritten commitment or a best efforts commitment. The template includes guidance, drafting notes, and alternate and optional clauses.


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  • Market Standards Highlights:
    • Warby Parker. On September 30, 2022, Warby Parker Inc. and its subsidiary (the “Company”) entered into a credit agreement providing for a revolving facility of up to $100 million (the “Credit Agreement”). The Credit Agreement also includes an uncommitted accordion feature pursuant to which the Company can expand its borrowing capacity by $75 million. Borrowings under the Credit Agreement bear interest at a rate equal to either (a) a base rate determined by reference to the highest of (i) the federal funds rate plus 1.00% per annum, (ii) the rate last announced by the administrative agent as its prime rate, and (iii) the Bloomberg Short-Term Bank Yield Index rate (“BSBY Rate”) for a one month tenor on such date plus 1.00% per annum, in each case, plus an applicable margin of 0.50-0.80% per annum; or (b) the BSBY Rate for the applicable interest period plus an applicable margin of 1.50-1.80% per annum.

      Notable Provisions: (1) The Credit Agreement includes an alternative reference rate based on the Bloomberg Short-Term Bank Yield Index. To track credit agreements with alternative reference rates, see the Alternative Reference Rates Loans Tracker. (2) The Credit Agreement also includes an accordion feature. For an overview of incremental facilities and accordion features in credit agreements, see Market Trends 2021: Incremental Facilities. For a step-by-step guide to determine whether a borrower has access to an incremental facility or accordion, see The Client Asks: How Do We Exercise an Incremental Facility?


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