24th July 2025, London: The European Leveraged Finance Association (ELFA), in collaboration with global law firm Akin, has today published the second issue in its Transferability Series, focusing on the evolving use of whitelists in leveraged finance documentation.
This latest edition outlines key concerns raised by ELFA members, particularly around how overly restrictive or opaque whitelists can inhibit market liquidity and limit participation from non-bank lenders. This is particularly of concern in distressed or stressed scenarios. This publication today offers a set of proposed solutions aimed at fostering greater transparency and flexibility in the transferability process
Ed Eyerman, CEO at ELFA comments: “Whitelist restrictions that are too rigid or frequently amended can undermine the very function of an open, dynamic secondary market. This publication captures investor perspectives and sets out pragmatic reforms that could strengthen liquidity without compromising borrower protections.”
Key issues highlighted include:
- Frequent changes to whitelists narrow the pool of potential buyers
- Lack of real-time visibility on approved names
- Blanket exclusions of distressed or loan-to-own investors, particularly during downturns
The publication proposes practical changes, such as:
- Requiring the whitelist to be circulated annually and available on request
- Capping the removal of institutions to three per year, with mandatory replacements
- Giving agents greater discretion to act reasonably on behalf of the majority lender
- Removing blanket restrictions on distressed investors or limiting such restrictions to pre-default stages
Akin partner Amy Kennedy added: “Enhancing transparency and predictability in transferability provisions is important in maintaining a resilient and inclusive secondary market. The recommendations set out in this report offer practical, investor-informed suggestions that aim to improve liquidity while preserving borrower protections, particularly in times of market stress.”
To access the publication, click here and to access the infographic click here.
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