The arranging bank is also known as the lead manager and is mandated by the borrower to organize the funding based on specific agreed terms of the loan. Those who participate in loan syndication may vary from one deal to another, but the typical participants include the following: 1. To learn techniques on how to analyze a company’s Financials check out CFI’s Financial Analysis Fundamentals Course. The agreement for all members of the syndicate is contained in one loan agreement. The liability of each lender is limited to their share of the total loan. Lenders then form a syndicate that allows them to spread the risk and share in the financial opportunity. Loan syndication occurs when a single borrower requires a large loan ($1 million or more) that a single lender may be unable to provide, or when the loan is outside the scope of the lender’s risk exposure. The syndicate may be a combination of various types of loans, each with different repayment terms that are agreed upon during negotiations between the lenders and the borrower. One of the lenders act as the manager (arranging bank), which administers the loan on behalf of the other lenders in the syndicate. Each lender in the syndicate contributes part of the loan amount, and they all share in the lending risk. The borrower can be a corporation, an individual project, or a government. A syndicated loan is offered by a group of lenders who work together to provide credit to a large borrower.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |