In Project Finance transactions, it is common for the borrower to request that hedging banks spread over time the mark-to-market value of a hedge that has been terminated or restructured. This spread is implemented through an adjustment to the fixed rate of the final project hedge. This situation typically arises in the following contexts: Refinancing, where certain hedging instruments are early terminated or, more commonly, novated by the existing hedging banks to the new he

When the lending banks do not all hold the same hedging derivatives - either because the allocation is not on a pro‑rata basis, or because the derivative rates differ - does the pari passu principle still hold?”