Security package and security agent
A security package is the collection of collateral documents, assignments, account controls, and contractual support that secure lenders' claims over a borrower's assets, contracts, and cash flows. In project finance and commercial real estate, the package is central because repayment relies primarily on project or property cash flows, often on a limited-recourse or non-recourse basis to sponsors. In syndicated or multi-lender deals, a security agent or security trustee holds the package on behalf of the whole lender group, so security does not need to be re-granted when lenders change.
How the security package is used on PF and CRE desks
Origination and credit teams assess whether the security package gives enforceable control over the assets and revenues that underpin debt service. IFC project finance material describes a typical package as including a mortgage on available land and fixed assets; sponsor support such as share retention and funding commitments; assignment of major project agreements (construction, supply, and offtake); financial covenants for prudent management; and assignment of insurance proceeds.
AFME's project finance discussion paper similarly frames segregation of assets and their financing as completed by a security and covenant package that lets lenders control cash inflows and outflows, commonly via share pledges, direct security on assets, a negative pledge, assignments of rights under project contracts and insurance, account security, step-in rights, and restrictions on debt, dividends, and activity.
In CRE, the same logic applies to property mortgages, rental assignment, account charges, and related guarantees, calibrated to asset type and jurisdiction. The security agent acts as the single legal holder for the syndicate, which simplifies transfers of participations and coordinates enforcement and releases.
Typical components and ranking
Common elements include:
- mortgages or fixed charges over land, buildings, and key plant
- fixed and floating charges over movable assets and undertakings, often documented in a debenture
- share pledges over the project or property company
- assignments of material contracts, receivables, and insurance
- charges over bank accounts and waterfall mechanics
- sponsor support letters, completion support, or guarantees where residual risk remains
Senior lenders usually take first-ranking security. Junior or mezzanine creditors may take a subordinated package that ranks behind senior enforcement rights under intercreditor terms. In the UK, charges created by a company must be registered at Companies House within 21 days under section 859A of the Companies Act 2006, which makes the existence of security publicly visible; missing that deadline can render the charge void against a liquidator, administrator or other creditors.
What the package does and does not do
The security package allocates enforcement rights and bargaining power if performance fails. It does not, by itself, create cash flow. Desks still underwrite offtake quality, lease durability, construction risk, and jurisdiction enforceability, and confirm that the borrowing SPV has actually granted and perfected each element. Weak documentation, unperfected filings, or conflicts with mandatory local law can leave lenders with paper rights that do not control the asset in practice.