Loan Swap Agreement Template for United Arab Emirates

The Loan Swap Agreement is a sophisticated financial instrument used in the UAE market when parties wish to exchange their loan payment obligations while managing interest rate or currency exposure risks. This document type is particularly relevant in the UAE's dynamic financial landscape, where both conventional and Islamic finance principles may need to be considered. The agreement explicitly details the mechanics of the swap, including payment calculations, timing, and settlement procedures. It incorporates specific provisions required under UAE federal laws, Central Bank regulations, and potentially DIFC requirements if applicable. The document is structured to ensure enforceability under UAE law while providing flexibility for various transaction types, from simple bilateral swaps to complex multi-currency arrangements. Key considerations include compliance with UAE banking regulations, documentation of Shariah-compliant structures if required, and incorporation of local market practices.

1. Parties: Identifies and defines the contracting parties, including their legal status and addresses

2. Background: Sets out the context of the agreement and the parties' intentions to enter into the loan swap arrangement

3. Definitions and Interpretation: Defines key terms used throughout the agreement and establishes interpretation principles

4. Swap Terms: Details the fundamental terms of the swap, including notional amounts, currencies, and term

5. Payment Obligations: Specifies the payment mechanics, calculation methods, and payment dates

6. Conditions Precedent: Lists conditions that must be satisfied before the agreement becomes effective

7. Representations and Warranties: Contains standard and transaction-specific representations and warranties from each party

8. Covenants: Sets out ongoing obligations of the parties during the term of the agreement

9. Events of Default: Defines circumstances constituting default and their consequences

10. Early Termination: Specifies conditions and procedures for early termination and close-out

11. Calculations and Determinations: Details how calculations will be made and by whom

12. Tax Provisions: Addresses tax-related matters and withholding obligations

13. Governing Law and Jurisdiction: Specifies UAE law as governing law and establishes jurisdiction for disputes

14. Notices: Sets out procedures for formal communications between parties

15. Miscellaneous: Contains standard boilerplate provisions including amendments, waivers, and severability