Case Studies » Single ISDA Negotiation

The brief:

DDL was approached by the Finance Director of a UK charity who had been recommended to us by a bank client.

The UK charity needed to put in place an ISDA Master Agreement with a UK bank to cover a medium term interest rate swap used to hedge a loan from that bank and for future potential derivatives transactions.

The charity had four main concerns:-

1. Would the ISDA Master Agreement be all one-way in favour of the bank?

2. They had heard that ISDA negotiation can take months and they wanted their Agreement to be in place within 4 weeks. 

3. Was DDL only able to negotiate from a bank's point of view because most of DDL's clients were banks?

4. Was DDL interested in the negotiation of a single ISDA Master Agreement?

DDL reassured the charity on these points and undertook the negotiation.

The solution:

Because DDL knows the likely positions banks take on certain credit related matters and where they can be flexible, it was able to negotiate a commerically reasonable ISDA Master Agreement Schedule which was acceptable to both parties.

DDL's normal practice is to telephone the counterparty's negotiator at the start of negotiations before emailing comments in order to establish a target timescale for the negotiation and possibly raise key issues at that point.

The result:

The ISDA Master Agreement was signed with 3 1/2 weeks from the start of negotiations. Certain technical points relating to UK charities law were referred to the client who responded promptly. The bank's negotiator also replied promptly to DDL's comments.

Although only one ISDA Master Agreement was negotiated at the time, it has lead to repeat business for DDL since.

As we offer a completely confidential service, our policy is not to disclose our clients by name. However, the case studies on this website indicate the range of institutions for whom we have worked.