A bank that faces funds usually faces the same fund under four different pieces of paper. The derivatives desk has an ISDA. The financing desk has a GMRA. Fund finance has a facility on LMA paper, or on LSTA-style paper if the borrower and the lawyers sit in New York. Each contains something a covenant register would call a trigger. They are not the same kind of document, and treating them as one flattens the differences that decide what fires, when, and what the bank is allowed to do next.
Two are master agreements. Two are loans.
The ISDA Master Agreement, published by the International Swaps and Derivatives Association in 1992 and 2002 forms, is an umbrella. It governs every over-the-counter derivative between two parties as one single agreement, so that on default everything nets to one number. The printed form is standard and nobody edits it. The negotiation happens in the Schedule, and the collateral terms in the Credit Support Annex.
The GMRA, the Global Master Repurchase Agreement published by ICMA in 1992, 1995, 2000 and 2011 forms, is the same idea for repo and buy/sell-back. Standard body, negotiated Annex I, close-out netting across every open repo. Unlike the ISDA it carries its own daily margin mechanics in the body, because the collateral is the trade.
The LMA is not an agreement at all. It is the Loan Market Association in London, and what it publishes are recommended forms of facility agreement under English law. Each facility is its own contract with its own covenants, undertakings and Events of Default. A subscription line, a NAV facility or a hybrid to a fund is typically drafted on LMA-derived paper, with the fund-specific mechanics bolted on.
The LSTA is the New York counterpart, the Loan Syndications and Trading Association. It is best known for secondary trading documentation and for model credit agreement provisions rather than one full form. An LSTA-style credit agreement to a fund is the same shape as the LMA one: a single facility with a borrowing base or NAV coverage test, reporting covenants and a compliance certificate, under New York law and with New York drafting conventions. The cov-lite, incurrence-only style that the LSTA name usually brings to mind belongs to leveraged corporate loans, not to subscription lines or NAV facilities. What actually differs from the LMA version is the vocabulary: which defined terms exist, how the borrowing base is built, and how cure rights are drafted.
Under a master agreement the trigger sits over every transaction at once. Under a facility agreement it sits over one loan. Same fund, same NAV decline, different blast radius.
Where the term lives, and what it does
| Document | Governs | Where the fund term sits | What firing it does | Cadence |
|---|---|---|---|---|
| ISDA Master | All OTC derivatives between the two parties | Schedule: Additional Termination Events (NAV decline, key person, adviser change); Part 3 for what the fund must deliver | Right to designate an Early Termination Date and close out every transaction, with the fund as Affected Party. Usually no cure, sometimes a short notice window. | When NAV is published, usually monthly, tested over 1, 3 and 12 month windows |
| GMRA | All repo and buy/sell-back | Annex I: additional Events of Default or termination rights, next to the built-in margin maintenance | Default notice and close-out of every open repo. Margin calls happen daily regardless. | NAV windows as for the ISDA; exposure itself is re-marked daily |
| LMA facility | One facility, bilateral or syndicated | Financial covenants clause, information undertakings, Events of Default. LTV or NAV coverage for a NAV line, borrowing base for a subscription line. | Drawstop, cancellation of commitments, acceleration by the Majority Lenders. Cure periods and equity cures are common. | Quarterly compliance certificate; borrowing base on each utilisation |
| LSTA-style credit agreement | One New York law facility | Financial covenants or borrowing base, reporting covenants, Events of Default. Same places as the LMA, different defined terms. | Same remedies as the LMA. Cure rights drafted differently and worth reading closely. | Quarterly compliance certificate; borrowing base on each borrowing. Incurrence-style tests only where the paper is borrowed from the corporate market. |
Why the distinction matters to whoever monitors
- The consequence is a different size. A 20% NAV decline under an ISDA Schedule gives the bank the right to close out a whole derivatives book. The same decline under a NAV facility gives it a drawstop on one loan. The register should not show both as "breach" in the same colour.
- The cure is different. Termination events under an ISDA or GMRA are usually immediate rights, or carry only a short notice window. LMA and LSTA paper usually gives days to remedy, or lets the sponsor inject equity and re-run the test. A breach with a cure running is a different state from a breach without one.
- The cadence is different. Master agreement triggers follow the fund's NAV publication. Facility covenants follow the compliance certificate calendar, and a borrowing base is re-run on each borrowing. One register has to carry all three clocks.
- The definitions are different. "Net Asset Value" in an ISDA Schedule, in a GMRA annex and in a NAV facility for the same fund are three definitions, often with three bases: headline, flow-adjusted, per share. A test computed on the wrong document's definition is wrong even when the arithmetic is right.
- They reference each other, on their own terms. A cross-default in the facility can be triggered by an Event of Default under the GMRA. The ISDA reaches the repo only through Default under Specified Transaction, and only if the Schedule defines Specified Transaction to include repo; the ISDA cross-default itself covers Specified Indebtedness, from which repo is often carved out. When one fires, the register should already know which of the other three it reaches, and by which clause.
What that means for the register
Each term needs its document type, the section it sits in, the test, the basis, the window, the consequence, the cure and the cadence, and a citation to the page it came from. Not because the list is long, but because the answer to "what happens now?" is different on every row. A trigger is not a trigger. It is a clause in a specific document with a specific consequence, and the document type is the first thing a reviewer looks at before the number.